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Author: DowDanny Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: To convert or not to convert? Date: 8/14/1998 4:20 PM
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Piz:

If you read the whole of my post you'll see that I'm not claiming that it is like a retirement account <<

Oops. Actually I did read your whole post - probably where I got the wording about "accounts".

Anyways, the anger was not directly at you, you just happened to have lit the fuse so were the closest to the explosion.

The anger is at those who EXPECT or even INTEND social security to resemble an individual account with "investment-like returns". It is clear (at least to us, and to the SS administration) that SS is an insurance program funded by a redistributive tax on the currently employed. The payout scheme doesn't have to have 'pyramid'-like qualities, even if it seems to be set up that way today.

Still, I see the threat of gov't mandated and supported individual Social-Security investment accounts as one of the biggest potential threats to my own wealth at retirement age.

Why ?

because I plan my retirement around my own tax-deferred and taxable investments, primarily in the stock market. I am presently contributing much more to this self-help program than I am taxed for FICA.... that's just the way it works out.

But still I have to worry for my stock investments because the market is more and more controlled by the net asset flows in various retirement accounts. As I will be on the tail end of the big boomer retirement age, the pre-retirees might already be a serious drag on my investment performance when I reach that tender age.

Suppose on top of all that 'voluntary' contributions there is a much, much larger sum of assets invested in SS retirement accounts. For me, personally, the extra 'stock boost' I get from my SS account will be trivial compared to amount I'm already contributing on my own - but the immense amount of assets invested by SS will lead to an even greater multiplier effect on the market declines as more and more assets are withdrawn for the generation retiring just in front of me. So, I get very little extra "boost" from investing a fraction of my SS tax, and I expect tremendous upward pressure on the market during my accumulation phase, and downward pressure during my distribution phase, thanks to the net incrases in stock-investments by "every body else's Social Security" accounts.

I'm sorry if this is so long, or so clear, and certainly so off topic.

As I implied before, I think this is best discussed elsewhere ("Retirement" boards) - BUT am still convinced that anybody expected 'full payback' of their SS contributions and/or expecting 'invidualized accounts' is both misinformed, and possibly dangerous.

Unfortunately, I know that I am way outvoted on this issue.

- Danny
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