Re: Question on Safety Net

[Dale Coberly <coberly@PEAK.ORG>]

The safety net is the whole reason for Social Security in the first
place.  The working part of the population will pay for the cost
of living of the non-working part of the population however you
arrange the accounting-- i.e. taxes or stock market retruns on
investment. I calculate that 3000 per year (approx the average
social security tax contribution) invested at 3% over the rate of
inflation would provide a $10,000 per year (approx the social
security average payout) annuity after forty years (you could retire
at age 60). I don't know how a private life insurance policy compares
to this or how social security compares.  30 years from now the
average social security tax per worker will need to pay about 5000
per year, because of demographic changes.  If the system is privatized
or partially privatized, that 5000 will come from lower wages or
increased "savings" (that is money you can't spend) resulting in
no difference in standard of living, except that which is created
by investments in real productivity, whether private or government.
all this can be discussed at length.

I would just say that while a privatized system may be defensible,
the only problem it solves is the appearance of a high tax rate,
in return it destroys the security in social-security.  I also note
that all the plans I have seen on the table involve a raise in the
age of retirement.  That may be o.k. for accountants and professors.
not so good for people whose working life is drudgery.  Those years
of longevity over 85 or so may not make up for working into your
seventies.  Good luck all.

Dale Coberly
coberly@peak.org