Ideally if American citizen's adequately saved for retirement, would social security be necessary at all?
I'm not an expert but ideally speaking if a citizen or a married couple adequately saved at least 20 - 40% of their income, invested wisely and let it appreciate over time, would social security be necessary. In addition if social security did not exist the tax correlating to it would not exist thus individuals/families would have a larger income to save and invest.
P.S. Why does the federal government loathe the idea of privatizing social security or allow private companies to compete against the government for social security and it's benefits?
- Toledo EngineerLv 61 decade agoFavorite Answer
It was a way of helping people "save" for retirement without actually doing so. The system was born during a time of financial trouble, so it appealed to people. Personally, if you don't save for your retirement, then it's your own fault. I wish the US Gov't would switch to either a privatized system, or no system at all. I am in the age group (26) that by the time I am done paying into SS, nothing will be left for me to collect.
- KiniLv 71 decade ago
The average person cannot save 20 to 40 percent of their income. There are expenses when you have a family and there is the chance of losing your employment and health insurance along with that plus you can become disabled and not have any income, or make bad investments and lose them, or have so much debt you file bankruptcy. You cannot predict your circumstances any more.
Social security as a retirement cushion is needed by people too old to get hired and who have contributed for 40 years to the fund. What might be changed are the other programs under Social Security that are costing more than they take in.
You have retirement vehicles when you work such as 401K or IRA managed by private enterprise. Social Security is a government benefit you are paying into and is something that is not subject to the volatility of the markets.
What about Medicare and Disability? If we didnt have those, millions of seniors and disabled kids would not survive. Only good income earners can pay for long-term care insurance or private disability insurance. The government plans are much more affordable than privately managed retirement plans.
- Anonymous1 decade ago
Would SS be necessary still? Yes. At the tax rate it currently is? No. SS is not a retirement fund. It is a safety net for 3 types of people: elderly (to keep them out of poverty - not to fund a whole retirement), disabled, and widows with children who lose their breadwinner.
Even life insurance is not enough for many people who think they have adequate levels. Imagine you have 2 kids and are a stay at home mom. Your husband makes 50k a year. So you are prudent and own a 150,000 dollar house and have 200,000 in life insurance. He dies tomorrow. That 200,000 can go pretty QUICK!!! SS keeps families like these from being on the street. Lets grandparents who worked their whole life in blue collar jobs live off more than cans of beans, and lets the disabled have a semi decent life.
Answer to P.S. Look at what happened the last time we lowered taxes and ran around patting everyone on their back for being "smart" with their money and buying oversized homes? Remember the Great Depression? 25% unemployment, people starving in soup lines, elderly people committing suicide left in right? Notice how that has not happened since FDR.
Further, here is one that will blow your mind. TAXES ARE IRRELEVANT. Human beings are competitive beasts. As long as taxes are not regressive, they do not matter. We do not care about how much we make "total". We care about how we compare. As long as taxes do not displace some people in the income ladder they do not matter. That's right. What matters is where you fall in the hierarchy. A human being who makes 100,000 a year but is in the bottom of the income ladder in his neighborhood is less happy than the one who makes 75 in a different neighborhood but is a high earner.
- Charles DLv 71 decade ago
There are some people in this country that can not afford to save money. Theer living
expenses are high and their wages are low. If a person can save that is the best thing.
If a person puts up his own social security he would end up with a lot more. I dont see any
harm in privatilzing social security. That way the government might not be able to spend it
because it is there.
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- 1 decade ago
Yes, because the average American can't afford to hire a really GREAT financial advisor. Except that when things crumbled in 2008 the system changed so much that the old indicators are no longer reliable.
(Translation: the astrologers can't read the stars any more.)
In 2008 the average 401(k) lost over 20%.
In 1987 it was over 30%.Source(s): http://articles.moneycentral.msn.com/learn-how-to-... http://www.bfsinvest.com/pdf/3_2003.pdf