Wednesday, September 14, 2011

This congressman has yet another plan to "save" Social Security, by converting it to an investment plan. It also creates a new federal cureaucracy to administer it. Here's the fundamental problem: Social Security is insurance, which pays out upon disability or upon reaching a certain age. By turning it into an investment plan, you fundamentally change the nature of the program. Oh, and by the way, what happens if the market tanks? Answer: "the above investment scenarios will undoubtedly have some down years where the portfolios would have a negative return...."

It might be worth thinking about if you could guarantee at least the benefit recipients currently get. But that's the problem with market-driven investments: return on investment cannot be either predicted or guraranteed.

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