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Posted by Ronald M Allen on December 26, 2010

As talk of privatizing Social Security heats up again, a Fortune magazine editor and Washington Post business columnist is warning that it’s a foolish idea that would threaten the financial security of future retirees.
“You’d think that the stock market’s stomach-churning gyrations – two 50 percent-plus drops in just over a decade – would have shown conclusively the folly of retirees having to bet their eating money on the market,” Allan Sloan writes in his Nov. 25 column. “But you’d be wrong. Stocks have been rising the past 18 months, and you can bet that we’ll see a privatization push from newly elected congressmen and senators who made it a campaign issue.”

CWA members joined activists across the country on Tuesday to make thousands of phone calls to their senators and representatives, telling them to protect Social Security and keep the country’s promises to retirees.

Bad investments are only part of the problem, Sloan said, because even workers who manage to invest well run the risk of low interest rates when they retire. Looking at one fund as an example, he illustrates how a $200,000 investment would pay out as $1,048/month if the retiree had turned 66 in October 2007. Someone retiring just 18 months later, after stocks peaked in 2007, faced a different picture and would see monthly payments of just $793.

“Social Security isn’t supposed to be a gambling program, or a wealth-building program,” Sloan said. “It’s an intergenerational social insurance program, in which we make sure our parents don’t have to depend on food banks and homeless shelters when they get old. Change that into an investment program and higher-income people will have an advantage because they won’t need immediate retirement income and can wait out markets. By contrast, regular Social Security favors lower-income people – as it should.”
(Source:- http://ping.fm/GARk3 )

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