Saturday, November 27, 2004

It's Only Your Retirement

You've probably heard the old joke: The only thing a stock broker is certain to do for you is make you broker. That's the essence of the stock market. It's not a sure thing. You invest at your own risk. Low risk earns low yields. High risk offers the possibility of high yields - an of course total loss as well. Regardless of how you do, your broker takes a cut off the top of your investments through fees and commissions.

Therein boys and girls lies the problem of what to do with Social Security. It's just too low risk to garner a high return on your investment. I mean, sure the government is protecting Grandma by making sure she doesn't lose that Social Security check she bases her retirement on. But who wants to live like their Grandma? There's all those great goodies like 54-inch plasma televisions to buy, all the great places like Las Vegas to play in, and who wants to stay home and eat canned prunes? So here's where we run into the pinch: All this might require a wee bit more income than Grandma's Social Security check.

Lucky for us though, any red blooded American raised in the rampant consumerism of the end of the last century can easily figure out the problem here. It's not our materialistic society, our inability to save for retirement, our lifestyle of living beyond our means or the associated crushing debt enjoyed by many Americans. No, silly. It must be the poor investment of Grandma's Social Security taxes by our wasteful and ever incompetent government. If only the stupid government would let us, we'd invest our own Social Security taxes, play the market, strike it rich, and live like kings when we're Grandma's age.

Nice story, but back in reality things don't work that way. Do you know of anyone who's IRA's have taken a hit in the last four years? Who doesn't? Yet President Bush in his infinite wisdom has decided that the government, obviously incapable of managing Grandma's retirement money, should allow you, the savvy investment aware and market wise citizen, to invest your own money in the stock market, reaping the windfall profit that is your right in lieu of the government's overly protective, and equally low yield, approach.

Let's forget about the fact for the moment that we are paying for Grandma's canned prunes and meager Social Security check though our current Social Security taxes. Lets forget for the moment that President Bush has yet to tell us just how much of our Social Security taxes he's proposing to let us invest or just how he'll pay for the budget shortfall - in the amount of billions of dollars - this will cause. Let's forget that the market does better when Democrats are in office. Let's just forget all those meddlesome facts for a while while we focus on just one aspect of this plan: who would you rather have insuring your Social Security benefits, the federal government or a Wall Street stock broker?

That's right you fools! Social Security is a government scam! You can do better in the market than it ever could with it's "safe" approach. Sure you'll take the risks that the government has taken for you. You might lose it all, but you could strike it rich and live like a king! But hey, it's only your retirement you're dealing with here. It's not like Wall Street is in this to make a profit off your investments. Your broker puts your retirement ahead of all that. You trust your broker, don't you?

Um, about that. From the Social Security Network:
Brokerage houses, banks, and mutual funds have been very active in the campaign to privatize Social Security. Small wonder, since they stand to gain enormous fees if billions of dollars are shifted each year from Social Security payments into accounts under Wall Street management. Of course, those fees must come from somewhere, namely from the balances in individual accounts.
Fees? Pshaw. I'd be in control of my retirement income, and thus reap the benefits! Or not:
Claims of enhanced control and ownership in Social Security privatization schemes are greatly exaggerated. The details provided in the privatization proposals put forward in Congress to date (in the cases where claims are backed by programmatic detail) demonstrate that workers would actually have little or no control over 1) how the assets are invested, 2) what would happen with the nest egg upon retirement, and 3) what would happen with any remaining assets upon death.
Who do you trust to insure your retirement benefits: the Federal Government or a profit driven Wall Street brokerage firm? Privatization of Social Security is a myth. Actually, according to the Social Security Network it's 11 myths.

Are you willing to bet your retirement on it?