Progressives in this country hate the Chilean privatized retirement model. The dumber ones try to call it a failure, backing their assertion with towering stacks of lies, but the smarter ones studiously ignore it, because the facts cannot be refuted.
Getting the Government out of the Pension Fund Business
The point of privatization is to get old age pensions off the federal government's books, but the transition is not cheap...
“For the U.S. right now it would be impossible,” said Alejandro Micco, who was the chief economist at Chile’s Finance Ministry until last year. To change to a private pension system “you either need to have a very big fiscal surplus to pay retirees without income from workers, or go into debt.” (Cain's Social Security Model)We're already deep in debt, so I don't see how we would accomplish privatization. Regardless of the system, private or public, there will always be problems...
The bank found that exorbitant fees and other costs charged by private pension fund managers eat up as much as 15 percent of the contributions made by average Chilean workers, and even more for poorer workers. Investment returns have been far more modest than the hefty 11 percent return claimed by the private managers. The Chilean government's pension superintendent says actual returns for someone earning Chile's minimum wage were only 3.7 percent between 1994 and 2000.
A recent report by the Chilean government brought more grim news, forecasting that as many as half of all workers won't be able to save enough to receive the minimum pension when they retire—even after paying into their accounts for 30 years—and will therefore rely on government subsidies. More than 17 percent of Chile's retirees now continue working because they can't afford to live on their pensions, according to that study, and another 7 percent want to work, but can't find jobs. (Mother Jones)All true, but misleading...
Returns were 11% during the boom times, and even at 3.7%, the Chilean model still beats our social security theoretical average return of 1-2 %. Also, we will always have the situation where some at the low end of the earning scale simply cannot save enough for their own retirement, especially when their savings is so small that the interest it earns is eaten into by flat fees that the big savers absorb much easier since those fees are proportionally smaller the more money you have in the account.
Finally, you need a lot of money to throw off the chains of wage slavery, and it's got to come from somewhere, regardless of the system. Far short of privatization, there are a few easy things government could do to help us all save money for our retirements: Stop taxing our money after we earn it, and stop inflating the currency, which is a silent, insidious tax on us all.
No Easy Answers
There are no easy answers, especially when standing in a deep chasm of our own making. This is not a sexy topic, but I find it interesting, and collected some links while researching this, so I thought I would share what I found for those who are interested.
More Links:
Freeman – How We Privatized Social Security
New American – Chile’s Privatized Social Security System is 30 Years Old
For Social Security, a Birthday Makeover
Social Security Administration – The Chilean Experience
No Easy Answers
There are no easy answers, especially when standing in a deep chasm of our own making. This is not a sexy topic, but I find it interesting, and collected some links while researching this, so I thought I would share what I found for those who are interested.
More Links:
Freeman – How We Privatized Social Security
New American – Chile’s Privatized Social Security System is 30 Years Old
For Social Security, a Birthday Makeover
Social Security Administration – The Chilean Experience
Social Security is not broke. And aren't you glad with what happened to the economy in 2008 that SS was not Privatized? When will the right learn that their learders are only out to screw them.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI would suggest as a start a small mandatory supplemental contribution to a 401K or similar. Employers now have the option to mandate new employees contribute 1 percent to a 401k. The employee can later opt out,but it starts one out on the right road. IMO. The little amount I contributed decades ago has turned into a nice sum. Defined pension plans are pretty much gone. This is the only hope for future seniors.
ReplyDeleteThere is no escaping the fact that Social Security and Medicare are unsustainable; the math cannot be disputed. At some point in the very near future you will have more people receiving entitlements from socials security than those contributing in and there is no lock box or trust for SS. It’s a pay as you go or as many pundits have said a ponzi scheme. The trust fund was raided years ago and all we have left is a bunch of IOUs backed by borrowed money (China). The time has come that we sit down and have a serious conservation about what we need to save both programs for those who are already retired and the actions we need to take to give the next generation other options other than SS and Medicare. As for Medicare, look for major changes to the program in 2014; changes that will drive more out of pocket expenses for our senior citizens. This will be in the form of either costs directly associated with services received or through the purchase of a medigap supplemental insurance plan; the kind AARP is pushing. The source of these new costs comes from the $500 billion already cut from Medicare with the passage of ObamaCare. So grandma has already been pushed off the cliff, she won't know it until 2014. You are correct Silver, there are no easy answers.
ReplyDeleteI think it says a lot about America that CHile can successfully do this...and we can't.
ReplyDeleteLibman:
ReplyDeleteIf you think it's only the republican statists but not the democrat statists who are out to screw us, you are hopelessly naive. But you already revealed that by you childlike confidence that social security is not broke. Got news for you dude, Al Gore's SS lockbox is full of IOU's.
It's too late for the big wave of Baby Boomers to privatize. They are already invested -- never mind that the money they put in has been absconded with.
ReplyDeleteOf course, many seniors don't need Social Security checks, and many seniors can afford more out-of-pocket expenses within Medicare. However, such is not the same for many seniors.
Perhaps just as alarming is this fact: some 80% of those in nursing homes right now are on Medicaid -- even if they entered the nursing home or other form of senior health care "well financed." Medicaid is particularly unsustainable, in part because gaming the system prevails and in part because those who can actually afford a nursing home costing $20,000/month are getting home care out of their own pockets. The matters of Medicare and Medicaid fraud also play into this mess.
The crisis of the wave of aging Boomers is upon us -- and still our so-called elected public servants are dilly dallying.
What are your goals? It's clear that the Chilean system has a downside. Do you consider that an issue?
ReplyDeleteIt seems that you are content to act the true believer and define any resolution as optimal because it is the dictate of the free (LMFAO) market.
What are your goals? How do conflicts of interest get resolved by the market?
The dumber ones try to call it a failure, backing their assertion with towering stacks of lies.
ReplyDelete------
Dumber ones?
Which ones are those? Herman Cain, Ron Paul, Charles Krauthammer, Thomas Sowell?
Again, what are your goals? Have you actually found an optimum system? Why would it be unfair to call you a true believer?
The bank found that exorbitant fees and other costs charged by private pension fund managers eat up as much as 15 percent of the contributions made by average Chilean workers
ReplyDelete------
That's mandated. Here in America the average sucker buys load funds and variable annuities to get screwed willingly.
15% for doing nothing, that's what I call bringing in the sheaves.
Everything has a downside, Ducky, including privatization, which I clearly state in the article.
ReplyDeleteMy purpose in writing this was to show that privatizing social security, tantalizing as it sounds to small government types, would not be easy.
So your argument is what?
OFF TOPIC:
ReplyDeleteSorry to intrude, but this information should be of vital interest to Z -- and others who have vivid memories of the Bad Old Days at FrontPage Magazine.
OBITUARY
Gerald Bruce Reynolds (1952-2011)
Gerald Bruce Reynolds, 59, of Hanford, California, passed away unexpectedly in June , 2011. Gerald was born August 26, 1952, in Montgomery County, Maryland, the son of Raymond Morrow Reynolds and Joyce Kristine Reynolds (née Collopy), and the brother of David and Nancy. He is survived by his daughters Melissa Reynolds, of Hayfield, Minnesota, and Melanie Reynolds, also of Hanford. Gerald graduated from Alhambra High School in 1969 and received degrees in broadcast communications and English with an emphasis on history from UNLV and SFSU. He was employed at Pleasant Valley State Prison as a GED teacher. His hobbies included playing guitar and singing his own original songs, playing tennis with his daughters, watching movies at home and at the movie theater, and expanding his intellect through rigorous study every morning before work.
He will forever be greatly appreciated and missed dearly.
Arrangements by Peopleís Funeral Home in Hanford. A memorial service will be held Friday, July 8, 2011, at 7 pm at the Church of Jesus Christ of Latter-day Saints, 2400 N. 11th Ave, Hanford.
http://www.legacy.com/obituaries/hanfordsentinel/obituary.aspx?n=gerald-bruce-reynolds&pid=152405947&fhid=11394
Those of us who had the great misfortune to know this character will remember him best as "Socrates."
~ FreeThinke
I don't remember him but he certainly had a reputation. The Beak Speaks was a huge fan.
ReplyDeleteSo your argument is what?
ReplyDelete----
My argument is your backpedaling.
"Progressives in this country hate the Chilean privatized retirement model. The dumber ones try to call it a failure, backing their assertion with towering stacks of lies, but the smarter ones studiously ignore it, because the facts cannot be refuted."
The facts without a set of constraints don't mean two warm farts in hell.
Tantalizing, to whom? You beg too many questions and the True Believer is close to the surface.
... but clearly a system that has the working poor finding it difficult to build for retirement and still paying 15% vigorish to the Milton Friedman shills is something everyone finds tantalizing.
ReplyDeleteUtterly insane.
Ducky: You're a bloviating gas bag at this point.
ReplyDeleteI can clearly state without self-contradiction that progressives hate privatization while also stating that privatization would neither be easy to accomplish nor be the panacea some us imagine it would be.
Nor is it a contradiction to yet explore the issue further. Stay in your progressive trench, it's safe and warm there...
Discussing privatizing a government entitlement program?
ReplyDeleteWhat are you trying to do, get the far leftist Naderite FJ to incessantly harass you with sock puppets to call you a "grandma killer?"
"The Beak Speaks was a huge fan."
ReplyDeleteI don't think so, Ducky. Beaker couldn't possibly be THAT big an asshole.
~ FT
As far as Social Security is concerned, I've said for the past forty years at least that a program of mandatory SAVINGS taken directly out of each paycheck, and deposited by employers in a private bank account that could not be accessed till age sixty-whatever would have been the most intelligent way to make sure the great gray brotherhood of feckless, short-sighted Americans made some provision for their old age.
ReplyDeleteTAXING the money and funnelling it through an enormous, ever-expanding, ever-more-complex, ever- more expensive and unresponsive government bureaucracy has been wasteful in the extreme -- just plain STUPID. And allowing congress to get its filthy hands on funds that should be absolutely SACROSANCT has been downright SATANIC.
Anyone who disagrees with me on this has to be a imbecile. };-)>
~ FreeThinke
Does no one remember that today is Buckwheat's Birthday -- or are you just trying hard not to notice?
ReplyDelete~ FT
who is Buckwheat?
ReplyDeleteLibman, Social Security is broke and most of us working right now aren't going to see a single penny of it when we get to retirement age.
ReplyDeleteForget about our kids getting anything, all they are going to inherit is debt.
We'd be fine if LBJ didn't steal SS to create Welfare and keep mostly black people in modern day slavery since the early 60's.
ReplyDeleteYea, privatize it. Restrict its investments to interest bearing only so that it cannot possibly lose money. In a normal environment, that's 4% or so, much better than the 2% the government claims to get.
And let's all stop calling SS an entitlement program. It's not. We Payed Into It With Our Own Money.
Public union workers on a 35 year retirement vacation? People on Welfare? That's entitlement.
Social security: A welfare cow with 310 million teats!
ReplyDeleteWe are all going to take a haircut on this one, to the tune of at least 50%. In other words, estimate in real 2012 dollars what you would rake in at 65, then halve it. I'm planning the same with my military retirement.
There's no way with interest and demographics that the US govt can continue without massive adjustment.
Overall, in a perfect world where the Chinese keep purchasing our debt and the interest doesn't need to get paid, I'm looking at $3K a month in SS and military retirement in 2012 dollars.
I will feel lucky to get $1,500 per month in real dollars. Hence, I've invested in land and other investments.
The operative phrase here is "in 2012 dollars".
ReplyDeleteI can imagine a significant devaluation of the U.S. dollar within the next few years. FDR did it in one swoop - 40% devaluation. BHO might try as well.
I don't think so, Ducky. Beaker couldn't possibly be THAT big an asshole.
ReplyDelete~ FT
-------------
I have to remember never to use sarcasm here.
" i have to remember never to use sarcasm here"
ReplyDeleteBut, Ducky, what would be left for you to say?
You'd have to remain mute, wouldn't you?
~ FreeThinke
Who is Buckwheat?
ReplyDeleteWhy Z, that's Emil King Chunya, his self.
I thought everyone knew that, after a public official in southern Delaware reported to work one January day and found the place closed.
"Oh shucks!" He cried, "I forgot it was Buckwheat's Birthday!"
Someone overheard, and by nightfall it had made the National News. It made quite a stink at the time -- a real brouhaha.
I'm not sure, but I think the poor man lost his job over it. About 25-30 years ago this was.
~ FT
Silverfiddle said...
ReplyDeleteDucky: You're a bloviating gas bag at this point.
There's a difference? Is that before or after "constrained" facts.
WTF? Must be a lefty thing. Probably, pretty good bud.
Liberalmann said...
ReplyDeleteSocial Security is not broke.
Look....over there!
A unicorn.
Sparkly, too.
The post itself aside… I don’t care for the pin-up you have pictured there, Silverfiddle.
ReplyDeleteThat bastard’s dictatorship ‘disappeared’ thousands and tortured thousands more.
His Caravan of Death murdered at least one American too, in case the above means nothing.
By the way I Googled that picture and the first source I could find was a site called “Xtreme Right Corporate”, by someone who self-describes as “An unabashed corporatist, nationalist, fascist...”
He’s quite the fan.
That bastard’s dictatorship ‘disappeared’ thousands and tortured thousands more.
ReplyDeleteBut he was a piker compared to the leftist dictators of the 20th Century. An Allende rein would have probably resulted in much more, paranoid death cultist that he was...
And Pinochet voluntarily relinquished power. And he turned Chile into an economic success story, something only China among the lefties has been able to to, and they did it by adopting a state form of capitalism.
So, I'm not defending the guy or justifying what he did, just providing some context.
If he had just been brown and not European looking, and a professor instead of a general it all probably would have been ok...
No, no....
ReplyDeleteI don't buy the 'oh some terrible Leftist somewhere somehow somewhen did something bad too' line.
Some people went out one day and never came home. Students. People we'd call kids. Some of them tortured to death because they had the crazy idea to speak their minds about a political issue.
There is no excuse, least of all some tidbit of economic policy you happen to like.
He's a stinking murderer.
"If he had just been brown and not European looking, and a professor instead of a general it all probably would have been ok..."
That's bullshit. I have written more than once about the evils of Joseph Kony and he's black. Of course Rush Limbaugh think's Kony's ok because aside from being a cannibal and a rapist and a child enslaver and mass murderer.. he's obstensibly a Christian.
This "oh we poor whites can't get away with anything" is just so tiresome.
No. He DOESN'T get away with being a mass murderer just because he's white, or he had the CIA eating out of his hand while he killed Left instead of Right (bar the odd American reporter), or he's super big-business friendly.
He was filth, and the world is better off that he's dead.
OK. I do not know your past, so I will not include you in this broad generalization, but I got tired of leftists worshiping Chairman Mao and Daniel Ortega while simultaneously singling out Pincochet. They're all in the same basket, and for consistency's sake, liberty lovers should condemn them all.
ReplyDeleteIf you are one of those who condemn them all (and I have no doubt that it is if you say so), then I congratulate you.
"They're all in the same basket, and for consistency's sake, liberty lovers should condemn them all."
ReplyDeleteAgreed in principle, and on those two (Mao, Ortega) specifically.
Ft, for the record, DUcky's blowing smoke; Beak hated Socrates.
ReplyDeleteI'd never heard of that story about BUCKWHEAT! What a thing to say! OH!!! The coin just dropped! He was making fun of MLK JR Day? I didn't even get that at first...duh!
thanks, FT That IS awful, by the way.
The annual share of the U.S. budget spent on programs benefiting seniors has increased rapidly in the past few decades. More importantly is that these same programs under current law are expected to continue to increase rapidly in decades to come. Data on Social Security and Medicare spending from the Congressional Budget Office is used to show the historical trends and projected share of the budget between 1970 and 2084. In 1970, spending on Social Security and Medicare was one-fifth of the budget. This portion has since grown to nearly 37%of the budget in 2010; this amounts to 8.4% of the country's gross domestic product.
ReplyDeleteThe growing number of beneficiaries due to the aging of the baby-boom generation will cause scheduled spending to surge. If current Social Security and Medicare policies continue without change, large deficits will undoubtedly emerge in the next decade and will grow even larger in subsequent decades. Undoubtedly, these trends are unsustainable, and current law cannot be allowed to stand if these entitlement programs are to remain solvent without bankrupting the federal government (http://bit.ly/y5BFQX).