Does Anyone Still Want Private Social Security Accounts?

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One innovative privatization model has been put forth by fund managers at SunBird Opportunity Funds. They have invented the SMIRF, or Supplemental Membership Income and Retirement Fund. The wisdom of this bold plan holds that a one-time membership fee, set at an initial level of comfort for the individual, will result in regular monthly payments beginning the first month following joining. Starting levels of membership are $2,500, $10,000, and $100,000, with resulting monthly payouts of $105, $420, and $4,200 respectively. One key feature is that member accounts earn a matching equity payment to their account each month equal to their monthly payout. This 'equity' balance accrues toward the next level of membership, and thus higher monthly payouts.
For example, a 40-year-old member joining for $2,500 would receive monthly payments of $105. After 6 years, payments would increase to $420 per month, with no additional membership fee. Eighteen years later, at the age of 64, the member will have accrued the account equity level of $100,000, qualifying the plan member for payments of $4,200 per month -- a fairly comfortable retirment by anyone's measure, especially for someone with no current retirement funds and seeking to avoid the ups and downs of the market over the years.
The simple beauty of the plan is its immunity to market and demographic swings. The 'Fund' will always be backed by member equity, and by diversified investment holdings of the company, structured as a member-driven LLC.

Kenneth Gardner of AZ 11:01PM June 12, 2010

The only sure thing is that the stockmarket will crash again. The stockmarket is a casino where you put your money on a number hoping to win. The stockmarket is not a place to put money you can't afford to lose.

Russ of AZ 5:40PM April 13, 2010

If I had been able to invest towards my own retirement for all of these years (I'm 62), I would have a substantial amount of assets that the government could not touch even after the recent mostly government caused economic fiasco.
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Compare that to the so-called Social Security Trust Fund that contains only politician's promises as assets. Those promises are that future taxpayers will be willing and able to pay much higher taxes to fund our retirement while those taxpayers are trying to raise and education their own families while we have double-digit inflation or worse because of the grossly expanded money supply.

cbrtxus of TX 6:09PM May 26, 2009

I would still much rather have some control from earlier age... considering that if you had invested when younger and made 10x what social security will pay out well losing half you STILL come out ahead.
We lost lots in our retirement account. BUT on the other hand there are no guarantees that sociall security will even have money in the next 20 years.
That may sound dumb... But if more poeple had more control over a portion of the account then things MIGHT look alot different in a good way. I write for ehow.com and have done a couple of artilces on social security.

Alrady of AZ 11:55AM March 16, 2009

I have mixed emotions about the battle between these two. I am an average citizen with an undergrad in Bus. Management - so I have a pretty good grip on how markets work, etc. - but I still would struggle to trust my retirement success on my own interpretation of the market. Can the government really trust the average american to the average broker (or to themselves for that matter) to smartly invest thier income towards retirement??
If something dramatic happens (again) - will privatizing SS benefits further disconnect the Gov. from responsibility? If we do this, would the gov. fully remove the taxes involved? Would they pay for americans to get seriously educated about the market and how to invest on an elementary level???

Jason Kinney of VA 5:11PM February 08, 2009

I believe a guaranteed Social Security Amount to be the better option. The average person cannot invest monies in the stock market, unless they have the assistance of a well qualified Stock Broker/Financial Investor. If gambling with your retiremnt account is what you choose, best of luck. The government does need to stop borrowing against the Social Security funds of retires and future generations to aid in its survival and seek better ways to help the account grow.

Ronald Myers of CA 3:52PM December 19, 2008

It is commonly held belief that Social Security will not exist by the time 30-somethings or younger retire. It is also understood that SS is hugely under funded to handle the needs of the Boomers as they move into retirement. Those two point, taken together, imply that SS is nothing more then a tax on the young to fund retirees. I think that is unfair on not what the original intent of SS.
I would not mind contributing to the pay-as-you-go scheme if I knew a portion of that money would exist for me and my wife. Let me manage my money! If I am willing to take a self-directed plan and accept the risks thereof, it should be allowed.

dominic of NJ 10:42AM November 21, 2008

Of course I want to control my own Soc. Sec. The author makes the assumption that gov't controlled SS will be around in 30 years and that it will pay anything near the inflation indexed value it does today. You give me my 13% back and let me invest it and I'll be FAR ahead by the time I turn 65. I was ALL CASH starting last summer (2007) and only recently got back into this market with my 401K, so I'm pretty confident I can do better than a negative rate of return that SS promises.

Chris of NM 9:05PM November 10, 2008

Severl counties in Texas went to privatized Social Security accounts in the early 80's, just before Congress disallowed it. Their returns are higher, they have more options with the money, e.g. annuity payments or lump sum, and they get better disability coverage.
Their contributions are not thrown into the stock market to be "gambled" away. The funds are used to buy annuities with a minimum rate of return that will flutuate year to year. No 40% losses there.
I understand that it is only several counties that do it for their employees, so to roll it out at national scale, with 100% of the funds going private, wouldn't be feasible. The financial "infrastructure" is just not there.
But I believe that if a smaller portion of the Social Security contributions are privatized in this manner, it would be one tool to help the nation over the baby boomer hump. What the percentage should be...?? My off the cuff answer is between 10-15%.
Cons - With the contributions being currently spent, plus some, would the goverment just issue more debt to cover? Probably.
- Who trusts the goverment (Congress) to put together a plan that would be steamlined and workable, instead of the 10,000 page monstrosity that would probably be vomited out? NO ONE :)

airno of CO 2:31AM November 10, 2008

Yes, those who retire and take a fixed-income annuity or single payout at retirement would do better when the market was up, rather than down, at the time they retired. But that is not really the issue for most in the future, as few workers will work for a single company long enough for it to determine a significant amount of one's retirement income.
No, most workers benefit from having a way to deposit pre-tax income into a retirement fund, like a 401(k) or 401(b). This has worked very, very well for many of us over the years. But one must work for a large employer for this to work.
People who work for themselves and/or who have small companies have SEP IRAs and other vehicles to stash retirement saving away. It is the folks who have none of the above who will benefit from new offerings now being discussed.
We don't want to throw the baby out with the bath water here. We want to include those who have been excluded, in the same way that has been the case with health insurance. We need to get $2.2 trillion of REAl MONEY into the SS Trust Fund at the same time. Forget President Bush and his phony SS privatization.

George Fulmore of CA 1:48PM November 09, 2008