Reply #5: I'll try to answer below

[papau]

"Will the actual benefit be reduced in real dollar terms"

Under option 2 which the Whitehouse has said is the basis for its eventual plan, the benefit cuts - for everyone - are very real - for example the change from wage index to CPI index in obtaining the average covered salary from which your benefits are calculated is a 50% reduction over 50 years. Any increase in the full benefit retirement age from the current Reagan Law mandated age 67 (fully in effect in 2027) means that early retires at 62 are no longer 5 years early - getting a 5 year reduction of near 60%, but then they are even more "early" if they retire at 62 - and will get a greater than 60% reduction.

"or is this a reduction in what it would have been if left untouched and assuming the whole system doesn't sink?"

Since under project 3 Social Security never sinks, we can call projected benefits THE BENEFITS - so yes the reductions are compared to the current promised and most likely to be given benefits under SS.


If those who choose the private investment accounts will lose money then why would anyone choose them?

They would not choose them - except the GOP has a sales pitch of "ownership society" - meaning you give up todays very large Soc Sec provided survivors and disability benefits, and in return for accepting a smaller guaranteed benefit under those programs, your heirs get to keep your account balance if you die before retirement. If you die after retirement, the effect of the forced annuity purchase is to either give you less in total than current benefits, or if you got lucky and for 40 years averaged 7%, why you'd have the option to get either a bit more than current benefits, or about 20% of the account as an inheritable asset for the kids - BUT OH BY THE WAY - IF YOU GET LUCKY, AND HAVE AN ASSET LEFT OVER AT YOUR RETIREMENT, YOU SHOULD DEDUCT FROM THAT ASSET ALL THE TAXES YOU HAVE PAID OVER THE YEARS TO FINANCE THE PERHAPS $5 TRILLION OF "TRANSITION COSTS" THAT BUSH WANTS TO BEGIN INCURRING IN THE FEDERAL BUDGET IN THE NEXT FEW YEARS!!!!