Will someday Social Security invest in the stock market?

Discussion in 'Economics' started by crgarcia, May 9, 2007.

  1. Over the very long term, stocks have outperformed treasury bonds.

    Given the upcoming crisis in Social Security, will they someday invest in the stock market?

    Likely, they will buy and hold very broad indexes, like the Wilshire 5000.

    The SS has any plans, studies to do so?
  2. nonam


    I wish they would let me invest/trade my own account.Its not going to be worth much with them managing it.
  3. Social security's going bankrupt soon.

    The ponzi scheme is over.
  4. gnome


    NO! Politicians won't be able to steal the money if it's invested in the markets, so it will never be allowed.
  5. One can only hope, but it's unlikely. It's a pot of gold too tempting for our glorious leaders not to borrow(steal) from.
    At present, Social Security is running a surplus. The 2006 Annual Report of the Board of Trustees of the Social Security and Medicare Trust Funds reported that Social Security closed fiscal year 2005 with a $172 billion surplus. For fiscal year 2006, the surplus is expected to be at a similar level.
    Where does the surplus go? It goes to fund all the stupid fuckin' projects our government can come up with.
  6. AC3


    Does it make sense... absolutely

    Would it help shore up the crisis in SS.. sure it would.

    Has the Social Security Administration studied this .... Yes the have and concluded that it made enough sense that they allow all members of Congress to invest their benefits in the stock market.

    Will you as a individual citizen EVER be able to invest YOUR dollars in anything NO. If you held a gun to your representatives head would you be able to invest in the stock market NO... why
    Your money has been spent as has everyone else's thats been put into the "Social Security Trust Fund" thats because the Congress has transferred all money collected into the fund into the General Fund and replaces that money with US Government Bonds (Paper). So as you see when this whole debate was going on a couple of years ago it was really an exercise ... there was no way that the Government could allow this to happen as they have counted on these funds for pet projects and just general working capital. Sorry.
  7. Your retirement already has been privatized. Its called 401ks, IRAs, SEPs, etc. You are free to manage these as you wish. Social Security is exactly that, SOCIAL SECURITY. Its not SOCIAL RETIREMENT. Its for those who can't or won't save during their working years so they have the bare essentials for living. It keeps them from needing to commit crimes or live on the street when they stop working. That secures your retirement as well as it keeps the overall texture of the community from decaying.
  8. AC3


    A side note to my last post:

    Each year, SSA turns over any surplus funds to the U.S. Treasury, which spends the funds. In return, SSA receives special-issue, non-negotiable U.S. Treasury securities, which represent an implicit promise by the U.S. government to repay Social Security when and if additional money is needed to cover benefits. These bonds are what we call the "trust fund." In 2000, the trust fund contained bonds valued at $1.2 trillion; by 2025, the accumulated surpluses should top $3 trillion.

    These, of course, are projections—the surpluses (and thus the trust fund) could be larger or smaller than anticipated, depending on wage growth, population changes, the overall state of the economy, and so on. Under the SSA's "low-cost" (or best-case) scenario, the Social Security trust fund will grow continuously until late in the 21st century.

    So, yes, there is a trust fund, representing the excess of payroll taxes over benefit claims, and it is "invested" in promissory notes issued by the government.

    Is there actually money in the Social Security trust fund? And if not, where is it?

    There is not actually "money" in the trust fund, any more than there is actually "money" in your bank account. When you open a bank account, the bank lends your money out. You exchange money for a promise from the bank to repay you, subject to whatever limitations and provisions you may have agreed to in advance. Your money is replaced with a piece of paper laying out those terms and obligations—a bank statement, passbook, quarterly notice, whatever. Your money has become a claim on a financial firm and is as good as the stability of that financial firm.

    Similarly, the surplus revenues flowing into Social Security over the years have all been lent to the Treasury and spent—all, that is, except this year's $160 billion surplus. Before the attacks in September, Congress was still arguing over this money. By December, the surplus is almost certain to have disappeared in any case.
  9. Mr Pain

    Mr Pain

    The Federal employee’s 401k system is called Thrift Savings and is such a plan. It has well over $200 billion, 3 million users and 5 choices,

    Government Securities Investment Fund (T Bills)
    Fixed Income Index Investment Fund (Bonds)
    Common Stock Index Investment Fund (S&P 500)
    Small Capitalization Stock Index Investment Fund (DJW 4500)
    I Fund (EAFE Index)

    You can switch between funds at no cost. I have been trying to learn the market so I can judge these no cost jumps. There are a few people who sell advice but their track records are all pretty short.
  10. I wish the IRS would eliminate Social Security taxes or at least make it optional whether or not you want to contribute. If one makes say 50k/year, you end up paying 7.65% in SS taxes which amounts to $3,825/year plus your employer matches that amount. I would rather have an employer pay me that extra $3,825/year. So that's an extra $7,650/year that I could have now to invest versus paying it to SS taxes. What if I die before I am 65 years old, I basically paid all that money to the IRS and got back nothing. Now assume that I make 50k/year every year for 30 years, my employer and I end up paying a total of $229,500 to the IRS. If I had that money invested into conservative stocks and bonds each year, that 229,500 would grow to who knows what. Let's say, it grows to $1,000,000 30 years from now. I start drawing money when I turn 65 each month for 20 years, assuming I live until I am 85. That 1 million, assuming no more gains, would give me $4,166/month for 20 years. Social security has a maximum, not sure what it is, what they'll pay you each month, but I know it's not anywhere near 4,166/month.

    But I know my wish of no more SS taxes will probably never happen. One can dream though.
    #10     May 9, 2007