Retiree's reactions to proposed Social Security reform

Factual Questions
1

Today I saw an front page article in the Seattle Post-Intelligencer about the latest Social Security Reform ideas. The newspaper had gone out and interviewed people in different age groups - 20s, 40s, 50s, 80s, etc., and printed various quotes from the interviewees.

I scanned down the quotes, and I wasn’t surprised by the quote from the 80-something person. I don’t have the paper in front of me, so I can’t give you the exact quote, but it conveyed the same message that I hear every time there’s talk about SS reform: this elderly person was clearly frightened that he or she was going to lose benefits.

Now, as I understand it, (and I freely admit that I have not done any in-depth studies of the proposals) the various reform proposals presented over the last few years have all said that they will have no effect on current recipients of SS benefits. Rather, the plan(s) are intended to give people who are still in the workforce some options for their own retirements, years down the road.

So, where is this fear among current SS recipients coming from?

  1. Does the current proposal actually include a plan to cut the benefits of current recipients, thus justifying the fear?

or (and I’d really like to keep this out of GD territory, but mods, feel free to move this thread if you think it’s necessary)

  1. Are retirees simply reacting to fearmongering from political opponents of those who advance these proposals? They seem to be an easy target for politicians who claim, “I’ll work to protect you from those who would slash the benefits for which you worked so hard for all those years!”

I’m genuinely curious about this. I belong to the generation that came right after the Baby Boomers, and I believe that the current system will be completely bankrupt by the time I’m ready to retire. My parents’ generation is, as the bumper sticker proclaims, “spending our kid’s inheritance”. I would like to see the whole system reformed, and I’m afraid that frightened elderly people are going to become the 800-pound gorilla that stops that reform from happening.

2

My guess is that you are seeing reactions of those who are helpless to do anything about whatever happens.
Sure they are scared.

3

Your belief is poorly founded, based on lies and completely irrational predictions about the future.

However, even if there’s a problem, putting your social security payments into the stock market is NOT a solution… unless you’re one of the stock brokers who hope to make millions off that approach.

4

I’m not dependent upon Social Security so I’m halfway dispassionate.

Two things.

First. No matter what anyone promises in advance, once Congress and the Administration and the various lobbyists start messing around there’s no telling what will happen.

The rest of this answer gets into politics so it will be continued in IMHO.

5

I am a retiree. I’m 55 years old, though I won’t be eligible for SS for 7 years (eligibility age subject to change.) I’ve been gathering all the information I could about the Bush plan to rebuild Social Security in his own image. Some parts of his plan make sense. He is hiding the rest of them. The Social Security system, in its present structure, has problems. They are not as scary as Mr. Bush would have you believe.

The doom and gloom: Mr. Bush says the system will be flat broke by 2042. Evaporated. Won’t pay you a dime. The Congressional Budget Office, now staffed by the presidents own party, says different. In 2052, the SSA will be able to pay out 70% of your benefits. The Social Security Administration agrees with that. A 30% cut may sound drastic, but the president’s own plan will cut 2052 benefits by more than 30%.

The centerpiece of the Bush plan is the personalized (formerly privatized) account. A small (and nobody’s saying how small) part of your payroll (Social Security) tax will be shunted into a very restricted investment account. Mr. Bush says you won’t be allowed to buy anything risky; only “very conservative” bond and stock funds. That means blue chip stocks and government bonds. When your personalized account invests in government bonds, you’ll be paying off older bonds in the Social Security “trust fund.” When you retire, your benefit amount will be reduced by the amount of profit in your personalized account. So, this account, which sounded like a 401k, is not like that. It’s a way for the government to invest in America’s corporations instead of its own bonds.

In some ways, that’s a good thing. Buying your own IOUs is a chump’s game. In a big-picture, long-term way, stocks give you a much better return than bonds. There are some details, though, that tromp mud in your ice cream. When you retire, you won’t be able to take that account and buy a cottage on a lake somewhere. You’re required to buy an annuity, and you’ll get your money in dribs and drabs, just like a regular SS check.

Another thing nobody wants to talk about is that benefits will be reduced. (Mr. Bush promises that anyone over 55 now will not get their benefits reduced. I’m okay, too bad about you.)

Somebody will have to pay off the bonds in the “trust fund,” too. The government doesn’t like to leave money lying around. After all, we owe trillions in bonds and treasury notes to big investment banks around the world. So, there’s no money in the “trust fund.” It’s all in bonds, which the US will eventually have to pay out of your pocket.

So, am I worried? Yes. I’m not panicked, though. It’s not as dire as Mr. Bush says. Hell, I’ll probably be dead by 2052. :smiley: