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cheesemouse
02-02-2005, 10:06 PM
If these private, now personal, accounts are such a rock solid deal why don't we take the surplus's that are now being paid in to the Social Sercurity trust fund and invest them? If we did that maybe the return would be so great that the projected short falls would pay for themselves...just think'n...LOL

Rich R.
02-03-2005, 07:10 AM
<blockquote><font class="small">Quote cheesemouse:</font><hr> If these private, now personal, accounts are such a rock solid deal why don't we take the surplus's that are now being paid in to the Social Sercurity trust fund and invest them? If we did that maybe the return would be so great that the projected short falls would pay for themselves...just think'n...LOL <hr /></blockquote>
IIRC, all money paid into the SS trust funds is invested. It doesn't just sit there. Off the top of my head, and I could be wrong here, the money is invested in rock solid government securities and not the stock market, where you can also lose money. They try to keep that money as secure as possible and they do not invest in anything that has any risk involved.

eg8r
02-03-2005, 07:17 AM
[ QUOTE ]
IIRC, all money paid into the SS trust funds is invested. It doesn't just sit there. Off the top of my head, and I could be wrong here, the money is invested in rock solid government securities and not the stock market, where you can also lose money. They try to keep that money as secure as possible and they do not invest in anything that has any risk involved. <hr /></blockquote> A very nice solid 1% return. Surely that is keeping up with inflation. /ccboard/images/graemlins/smile.gif

eg8r

Wally_in_Cincy
02-03-2005, 08:09 AM
<blockquote><font class="small">Quote Rich R.:</font><hr>IIRC, all money paid into the SS trust funds is invested. It doesn't just sit there. Off the top of my head, and I could be wrong here, the money is invested in rock solid government securities and not the stock market, <hr /></blockquote>

Correct. By law, the surplus is invested in US Treasury bonds.

Rich R.
02-03-2005, 09:00 AM
<blockquote><font class="small">Quote eg8r:</font><hr> A very nice solid 1% return. Surely that is keeping up with inflation. /ccboard/images/graemlins/smile.gif <hr /></blockquote>
Yes, they would have been much better off, if they had the trust funds invested in ENRON. /ccboard/images/graemlins/tongue.gif

eg8r
02-03-2005, 09:51 AM
[ QUOTE ]
Yes, they would have been much better off, if they had the trust funds invested in ENRON. <hr /></blockquote> Would it not have been just as easy to pick a stock that has done tremendously well, or do you live in a negative world all the time?

eg8r

cheesemouse
02-03-2005, 10:29 AM
<blockquote><font class="small">Quote eg8r:</font><hr> &lt;/font&gt;&lt;blockquote&gt;&lt;font class="small"&gt;Quote:&lt;/font&gt;&lt;hr /&gt;
Yes, they would have been much better off, if they had the trust funds invested in ENRON. <hr /></blockquote> Would it not have been just as easy to pick a stock that has done tremendously well, or do you live in a negative world all the time?

eg8r <hr /></blockquote>


President Bush said "everything is on the table". We have all seen the saugage being made in Washington and we know that under the best of circumstances it will be two years before any new law will be passed and put in play. In that interim let's run a test by taking the surplus now being paid into the SS Fund, set up one of those 'Blue Ribbon' know it all panels, and let them invest that money in the market for say a sun-setted two year period and look at the results. It would be something everyone could look at apples to apples. I don't care what the experts say, nobody knows what is going to happen when this hither to unavailable money hits the market place. It would be a test run for all involved. I'm sure some very instructive things would start to fall out of this experiment...I think it is affectionaltely refered to as 'unexpeceted consequences'.

The first thing that woud happen is these funds would no longer be availiable for government deficit spending. Ed, you should like that.

Maybe the Cheese is just to simple minded....hmmmmmm

eg8r
02-03-2005, 11:43 AM
[ QUOTE ]
President Bush said "everything is on the table". We have all seen the saugage being made in Washington and we know that under the best of circumstances it will be two years before any new law will be passed and put in play. In that interim let's run a test by taking the surplus now being paid into the SS Fund, set up one of those 'Blue Ribbon' know it all panels, and let them invest that money in the market for say a sun-setted two year period and look at the results. It would be something everyone could look at apples to apples. I don't care what the experts say, nobody knows what is going to happen when this hither to unavailable money hits the market place. It would be a test run for all involved. I'm sure some very instructive things would start to fall out of this experiment...I think it is affectionaltely refered to as 'unexpeceted consequences'.

The first thing that woud happen is these funds would no longer be availiable for government deficit spending. Ed, you should like that. <font color="red"> I would be much happier if we cut a lot more spending than that. I have joked about this before, Bush's spending aligns himself well with the left proving he is more moderate than conservative. /ccboard/images/graemlins/smile.gif </font color>

Maybe the Cheese is just to simple minded....hmmmmmm <hr /></blockquote> eg8r

Rich R.
02-03-2005, 01:44 PM
<blockquote><font class="small">Quote eg8r:</font><hr> <hr /></blockquote> Would it not have been just as easy to pick a stock that has done tremendously well, or do you live in a negative world all the time? <hr /></blockquote>
Sorry Ed, I live in the real world, not in the Republican world.

Picking good stocks equates to shooting craps. At one time, ENRON was considered a great investment. From day to day, you never know what will happen to any company. I don't think you would like your retirement money invested in a company that ends up being the next ENRON. I don't want the Social Security trust funds invested in that company either.

IIRC, a number of years ago, Mr. Forbes, in his magazine did an experiment. He threw darts at the stock listings in the news paper and did some fantasy investing in the stocks that were hit. A small group of experts picked an equal number of stocks.
The stocks hit by the darts out performed the expert picks. /ccboard/images/graemlins/confused.gif

I think the small return, with not chance of loss, is the best strategy for something as important as the Social Security trust funds. JMHO.

SecaucusFats
02-03-2005, 02:54 PM
One of the keys to smart investment is diversification. IOW, you never put all your eggs in one basket, be it one stock, or type of stock (i.e.- growth, value, tech, small cap, large cap, etc.) Debt instruments like bonds are also a key component of a smart investment strategy.

The other key is dollar cost averaging- making regular investments at the same time each month. Dollar cost averaging allows you to purchase more stocks when prices are low and less when prices are high.

One way to play the market is to purchase ETF's (Exchange Traded Funds) like Diamonds (Dow), Spiders (S&amp;P), and Cubes (QQQQ) (Nasdaq). These shares represent a market basket of all stocks represented on a particular exchange.

A lot of things have to be taken into account when investing- factors such as age, risk tolerance, how many years you have until you will need the funds, income requirements, tax issues, etc. It also goes without saying that one must exercise due diligence in selection of equities (examining the company's 10K and gathering up all available data)before purchasing. Any investment advisor worth his salt will tell you as much.

No administration Rep or Dem would be so stupid as to put all SS trust funds into one stock.

eg8r
02-04-2005, 05:27 AM
[ QUOTE ]
Sorry Ed, I live in the real world, not in the Republican world. <hr /></blockquote> Why be sorry, you choose to be negative, it does not affect me. But if you think the real world is only about Enron, then you might be losing it.

[ QUOTE ]
I think the small return, with not chance of loss, is the best strategy for something as important as the Social Security trust funds. <hr /></blockquote> I am fine with lower risk investments, but when the return does not even cover inflation there is a problem for those looking to collect down the road. As far as I look at it, there is more of a risk leaving everything the way it is and sitting around "hoping" some money will be left. SS is not gauranteed, so it is not nearly as less risky as you would like us to believe.

eg8r

Ross
02-04-2005, 01:46 PM
<blockquote><font class="small">Quote Rich R.:</font><hr> <blockquote><font class="small">Quote cheesemouse:</font><hr> If these private, now personal, accounts are such a rock solid deal why don't we take the surplus's that are now being paid in to the Social Sercurity trust fund and invest them? If we did that maybe the return would be so great that the projected short falls would pay for themselves...just think'n...LOL <hr /></blockquote>
IIRC, all money paid into the SS trust funds is invested. It doesn't just sit there. Off the top of my head, and I could be wrong here, the money is invested in rock solid government securities and not the stock market, where you can also lose money. They try to keep that money as secure as possible and they do not invest in anything that has any risk involved. <hr /></blockquote>

It is pretty confusing but here is what actually happens.

Currently SS, supported by about 150 million workers, is bringing in more money than it is paying out in benefits to the approximately 50 million retirees and disabled. This excess money each year (about 160 billion in '04) theoretically goes into the SS "Trust Fund." Over the years these SS tax surpluses have accumulated to the point that there is now $1.5 trillion in the SS Trust Fund.

BUT, here's the rub. Income taxes (non-SS) have not been enough to pay for general government expenditures for a long time. So when those excess SS funds come in the government spends them on general expenses and gives an IOU for that amount to the Trust Fund in the form of US Treasury notes.

Currently almost all of the Trust Fund is in US Treasury notes. So is the Trust Fund real?

Sort of since it is backed by US Treasury notes.

But sort of not, since it's like the government splitting itself in two and one part lending the other part money. When the number of retirees increases dramatically over the next few decades and SS starts running a deficit instead of a surplus, the Trust Fund will need to call in these Treasury notes to pay benefits. Where is the US government going to get the money? From income taxes. So where did the Trust Fund go? Did it ever really exist?

BTW, private accounts will do almost nothing to solve this problem, at least not in the near or medium term. In terms of income vs outgo, private accounts only help if they provide a rate of return over several decades that is higher than the roughly 3% that the SS Trust Fund currently earns.

The only real solutions are:

a) cutting SS benefits - this can be done by raising the retirement age or lowering the rate of increase in benefits by indexing them to the consumer price index instead of to US wages as is currently done.

b) raising SS taxes - this can be done by calculating SS taxes on income beyond the current 80k or so

c) raising income tax - so the government isn't spending the SS surplus as fast as it comes in

d) cutting general government programs and hence spending - same effect as c).

No matter which routes are chosen the decisions are going to be politically unpopular since they will hurt one group or the other financially. So all of this should lead to some interesting debates and political grandstanding over the next couple of years!

Rich R.
02-05-2005, 05:52 AM
<blockquote><font class="small">Quote Ross:</font><hr> a) cutting SS benefits - this can be done by raising the retirement age <hr /></blockquote>
Ross, a little known fact is, that this is already being done, and has been for some time.
Most people think that they are eligible for full SS retirement at age 65.
In reality, beginning with people born in 1938, the full retirement age started increasing. The full retirement age for people born in 1960 is now 67.
I'm not sure if any more changes are currently planned for the future, and, of course, people can still exercise their option of reduced SS benefits at age 62.