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This is one of the arguments for privatizing social security. Instead of social security that doesn’t really help the economy, generate more wealth or increases

This is one of the arguments for privatizing social security. Instead of social security that doesn’t really help the economy, generate more wealth or increases capital this method is essentially the same thing but reinvests in our economy. Instead of the FICA contributions going to social security, they go into an index fund that you can track and that grows. Whenever anyone brings up privatization of social security, everyone freaks out because the big money bags will steal it and the common man will be left with nothing...unfortunately they are kind of right. Intense lobbying every time privatization has had consideration makes it so those index funds are high expense, not optimal, and little choice. Goldman Sachs is writing the rules and doing so to benefit themselves. The exact opposite that Bogle stood for. If we were to stop that somehow then this would be fantastic. What you’re saying though was brought up seriously in the tax bill discussions. They are already making it such that every small business gets a 401k option for employees. Not just tax breaks but forcing them to offer one with expenses covered by the state. That’s a good first step. I forget if it was California that is starting that 2020 or the country. The next step is what you’re saying, 1% tax employer funded. That would be extremely popular legislation and help people far more than a pseduotax break and cost a fraction of the price. In fact it will be a net positive if people were to save more. I think that has a great chance of becoming a reality. The correct way to privatize social security with maybe a cushion in case there’s a disaster would be far more reaching and better but anything that helps the middle class save is imperative.

thatfrenchguy 8y ago
“ Instead of the FICA contributions going to social security, they go into an index fund that you can track and that grows.” That works fine until a) you pick the wrong index fund (and most people don’t know anything about finance) or b) the US hits a japan level stagnation and you can’t retire at all. The point of Social security is to be a safety net (that’s also why as a rich person you get less benefits from it).
- smileysteve 8y ago
  > That works fine until a) you pick the wrong index fund (and most people don’t know anything about finance) The irony of this posted in a Bogle thread is hilarious. Bogle subscribes to the research done in a Random Walk Down Wall Street. Take all of the people who know the most about finance in the world (run the best funds) and they have a ~50% chance of beating the broad based index (S&P 500) any given year; If you expand that 10 years, the number of funds approaches 0. If you include the fees, it's ~42% beating the market any given year. The "secret" and why bogleheads work is there is no picking. You pick the total stock market. But, if SS has regulatory concerns, it'll do just fine in VOO, representing the S&P 500.
ChrisLomont 8y ago
>Instead of social security that doesn’t really help the economy, generate more wealth or increases capital SS assets are invested daily by law into safe securities (special US bonds) and the cash is immediately put back to use in capital markets. Here [1] you can look through the data to grasp the scale of it. [1] https://www.ssa.gov/oact/progdata/investheld.html https://www.ssa.gov/oact/progdata/investheld.html

thatfrenchguy 8y ago

“ Instead of the FICA contributions going to social security, they go into an index fund that you can track and that grows.” That works fine until a) you pick the wrong index fund (and most people don’t know anything about finance) or b) the US hits a japan level stagnation and you can’t retire at all. The point of Social security is to be a safety net (that’s also why as a rich person you get less benefits from it).

smileysteve 8y ago
> That works fine until a) you pick the wrong index fund (and most people don’t know anything about finance) The irony of this posted in a Bogle thread is hilarious. Bogle subscribes to the research done in a Random Walk Down Wall Street. Take all of the people who know the most about finance in the world (run the best funds) and they have a ~50% chance of beating the broad based index (S&P 500) any given year; If you expand that 10 years, the number of funds approaches 0. If you include the fees, it's ~42% beating the market any given year. The "secret" and why bogleheads work is there is no picking. You pick the total stock market. But, if SS has regulatory concerns, it'll do just fine in VOO, representing the S&P 500.

ChrisLomont 8y ago

>Instead of social security that doesn’t really help the economy, generate more wealth or increases capital SS assets are invested daily by law into safe securities (special US bonds) and the cash is immediately put back to use in capital markets. Here [1] you can look through the data to grasp the scale of it. [1] https://www.ssa.gov/oact/progdata/investheld.html https://www.ssa.gov/oact/progdata/investheld.html