how does a private social security account work?

[DarkSim]

i live abroad so i don't know much about this.

could anyone help me so i can explain it to a friend?

[AuntiBush]

1. Plainly put: It doesn't!

Gov't makes cut; Investors make even bigger $$ and you're lucky you have anything left in between. Just hope the stocks are doing spectacular the day you retire.

There is a reason why Presidents Eisenhower (R) and Frankin D. Roosevelt (D) a Wall Street Attorney before becoming President knew what NOT to do w/Social Security.

Call Privatization for what it is: Pirate-ization & Corporate take-over of your money which equates to more money in their already overstuffed crooked pockets.

[LynnTheDem]

2. You gamble on the stock market, and hope like hell you don't invest with

someone like ENRON.

[democracyindanger]

3. The basic idea

would be to allow people to take part of what they pay into Social Security and invest it at their own discretion.

Why it's an incredibly crappy idea should be pretty obvious. The clearest example is the dotcom bust. Now imagine that people who lost their shirts then lost their Social Security--their safety net.

The markets make a bundle off of casual investors. It's fair to say they prey on them. Add in recent scandals like Adelphia, Global Crossing and Worldcom, and letting amateurs loose to be fleeced is asking for a whole bunch of trouble.

[SoCalDem]

4. and people who work in low paying jobs get hurt the most

because 2-4% of "not very much" is always going to end up "not very much"...

and they need every stinking penny of their money to live on, so they are less likely to have other savings as well..

[The_Casual_Observer]

5. The goal is to eliminate the Social Security system all together

The first step in this process is to offer a plan that appears to "help" younger workers that would, at the same time, cripple the payment system for the current retirees, eventually leading to a collapse of the whole thing.

Republicans have historically been against lending a hand to the less fortunate citizens, the new deal has been a pebble in shoe of the rw for the last 70 years. The 9/11 thing has offered them a chance to push all kinds of horrible shit on a traumatized public.

[ibid]

6. it is a margin account where the loan payback is greater than the balance

for 30 to 40% of the people - the payback being a requirement so that a reduced social security annuity can be "purchased" with that balance.

if you are lucky - and the stock market not in one of its multi-year slumps - you may score both the annuity and a few dollars "left over after purchase of the annuity" - and indeed these are dollars, if they exist, that your kids can inherit.

before retirement age the basic current survivor benefits are increased by the account value - but the basic current survivor benefits are drasticly cut under the 2 trillion 10 years, 5 trillion over 20 years borrowing for "transition costs" plan.

If the survivor and disability benefits are not cut, the "transition costs" double.