RE: Don't Blow Away Social Security

[Javier Jimenez <jimenj@yahoo.com>]

>>>>>>> Charlie Hoyt Wrote:
  2. Shifting to a privatized system would require a hugely
  expensive period of transition.
<<<<<<<

Not switching will cause future generations to pay higher payroll
taxes to support future retirees, and higher income taxes to re-pay
all the debt owed to the SS.

>>>>>>> Charlie Hoyt Wrote:
  In Chile, which privatized its retirement system in 1981, people pay
  between 10 and 20 percent of their annual retirement contribution
  just to maintain their account. The stock market would have to
  perform spectacularly to make up for that kind of expense. 
<<<<<<<

Hog wash!  10 to 20 percent sounds like numbers picked from thin
air.  After 17 years of operation, the Chilean system can provide
accurate numbers about the exact cost of their personal accounts;
did the author bother researching this.  I don't think so. I think
that the author should provide real numbers with sources.  I guess
he can't because experince will not support his conclusion.  However,
we don't need to look abroad to get a measure of what it would
cost.  In the US, IRA custodian fees on the average are about
$25/Year for a mutual fund accout regardless of the number of
investment funds held in the account.  Management fees for no-load
mutual funds run from 0.50% to 1.50% per year.  Investing $2000.00
per year on an IRA, assuming no gain, can cost from 1.75% to 2.75%
for the first year; as the account grows in value over time the
$25 custodial fee becomes a negligible percentage collapsing the
cost to 0.50% to 1.50%; in fact most mutual fund companies wave
the custodial fee once the accounts value reaches a set amount,
usually $10,000.  So, why would the upkeep of PRA cost much more
than this?

>>>>>>> Charlie Hoyt Wrote:
  Under our current system, the government bears the risk of economic
  downturn, and we're all promised a constant monthly amount of
  retirement income. Under a privatized system, we each individually
  bear the risk. Even the cleverest investor will likely lose money
  in a major financial downturn. And not all of us are so clever
  - or can afford to spend our time playing amateur Wall Street
  trader.
<<<<<<<<

1) When the government bears the risk means that taxpayers bear
the risk, the government doesn't generate wealth; so in times of
economic downturn, higher income and payroll taxes would be needed
to support the bloated government.

2) Privatization proposals do not call for individual workers
investing directly in stocks, but through mutual fund like investment
vehicles.  Since the author mentioned Chile's system, why did he
comment in this, most-misleading, way?  In Chile, worker's contribution
go to financial industry professionals that invest the money as
mutual fund managers do here in the US.  So, more hog wash!

I guess the author's agenda got in the way of facts, so I've had
enough of this.