I came across an article on Yahoo Finance that the issue of privitizing social security may not be dead after all. Currently, neither Obama nor McCain want to even mention privitization. With the down market, it’s not a popular plan in the least. However, everyone is aware of the problems with Social Security:
- An extremely low rate of return, especially for larger or higher income families.
- The quickly disappearing funds for the entitlement.
- You have no legal rights to your Social Security funds.
- You can not pass on these benefits to your heirs once you die (with a few exceptions).
For anyone looking to take control of their finances, Social Security is not the plan to retirement. A quick calculation shows I can expect around a 2.5% return on my Social Security “investment”. Historical rate of return on the stock market is 10%. Furthermore, these funds are your funds. If you die, they are an asset in your estate. You are fully entitled to the funds, it is your money. In order to control your finances, they need to be your finances!
With the down market, people are blindly willing to throw more and more tax money to the government in the hopes of a secure retirement. Relying on Social Security for your retirement is foolish. Take the time to invest in your own retirement (401k, IRA, etc). The market goes up and down but over the long haul, it always rises. Don’t succumb to fear, invest with confidence and rely on yourself instead of the government.
When the privitization talk comes around again, be sure to remember these facts. You’ll surely start to feel the attempt to ‘recover’ Social Security when the FICA taxes start going up again.
Written by Matt on October 9, 2008
