1. The SS "Trust Fund" is pure accounting fiction that is only legal for a government "Trust Fund." The surplus is taken away from the SS Administration & sent to the Federal Government's General Fund to be spent on current budget obligations. "Special" Treasury Bonds are issued, in lieu of those borrowed funds, that can only be cashed in through the Treasury; the General Fund. If the FICA withholdings are all being spent on current SS expenses, but are insufficient (as early as 2010), then the "Trust Fund" bonds must be cashed in to cover remaining expenses. If the economy isn't doing as spectacularly as it is currently then there'll be no money available in the General Fund either. So, the government sells bonds publicly to raise cash to redeem the "Trust Fund's" bonds (like paying your Visa with your MasterCard), thereby increasing the Federal Deficit. Or, the government could print new money, introducing hyperinflation.
As for the supposed cost of investing in stocks, one needs to investigate Index Funds (average annual management costs are <0.5%). The fund would not be in individual accounts (in my version), but managed as a whole from one central investment office, requiring only a few dozen individuals, to make and monitor Index Fund investments.
As for risk in the stock market... You need to check out the Motley Fool (www.fool.com) to see (in a short series of tutorials) that the market has historically gone up in value by orders of magnitude, in spite of the day to day up & down gyrations. Watching the market daily does require a strong stomach, but if you monitor from a month to month, year to year or even decade to decade perspective the growth in value is incredibly strong and impressive.
As for the cost of the changes... If the Federal government would stop stealing the SS surplus funds today, and redirect it to the investment fund suggested above, the only pain would be that the Federal Government would have to admit that it is still borrowing (running up the Federal Deficit) to pay for all that it has obligated us (taxpayers) to fund.
