Privatize Social Security

Social Security's inflation-adjusted rate of return is only 1.23 percent for an average household of two 30-year-old earners with children in which each parent made just under $26,000 in 1996 (1998 Heritage Foundation data: I don't think it has changed much since then. This site showed a HIGH estimate for me of 1.69%). Anyway you cut it, that is barely keeping up with inflation at best, or in the soon-to-be future, way behind inflation. And then when you and your spouse die (assuming your kids are grown) the GOVERNMENT gets the rest of all that money you worked so hard for.

I think the biggest benefit of privatizing social security would be the wealth building aspect of each citizen having control over THEIR own money. I just checked, and I can get a 1 year CD with a $500 min at a rate of around 2.8%. That's about 80% better than the social security return. And that is just in CDs! With my longer time horizon (42 yrs old), I could do better than 2.8% with stocks and bonds. And yes, even with the market tanking, I would do that. I'd love to be buying now at historic low points, because in 20 years it is almost guaranteed to be higher. Check this chart out. Pick any highpoint, and then go down the road 30 years. Even if you pick the peak before the Great Depression ('29) to buy, you would be up in '59. No excuses here. You can buy no-load, mutual funds that automatically diversify.

So I can make more, and if I die all that wealth would go to my wife and kids, increasing their wealth. Immediately. No waiting until 65 or 60 at the earliest. Just think how this could help low income families: college tuition, buying a house, a downpayment on their retirement accounts. Anything those citizens did with that money would be better than the government squandering it at 1.89% for other people, instead of the fruits of MY labor going to help MY family.

Privatize it NOW. Have options for folks to remain in if they want (suckers). With all this spending now, I'd rather the government take that money to pay out to folks for getting out of Social Security (sure, a reduced amount from what I put in, but I'll come out ahead in the end). Mandatory privatized for those under say 35. Use the TSP (Thrift Savings Plan: Federal gov and military eligible-only 401k type plan) as the available funds to keep it simple for folks, if they want. Have full option out available too (invest in whatever you want, under recognized plans and funds). Keep the mandatory payroll 'tax' to fund that, but your tax goes into your account and you have the control.

Seems like a good plan to me. My money, I control it, and even if I just sock it into CDs I do better than Social Security. If I die an untimely death, my family, who is my primary responsibility, benefit now, not down the road.