[PacketPaul]

Every job in the US saves 15% of your income for retirement. It is called social security. The problem is the politicians control it instead of the individual so the money is not invested but spent. If people were allowed to have private retirement accounts with that Social Security money, everyone would be able to retire comfortably.

[sheeshkebab]

I guess you’ve never been in a country with (hyper)inflation or with stock market dropping 90%, and when all of your private retirement money goes up in smoke in a year. the closer you are to retirement age the more interesting it gets.

[Nbox9]

This isn’t technically true in a lot of ways. Social security is taxed at 12.4% for up to $137,700 in wages, and technically 6.2% come from your paycheck and 6.2% come from the employer. There is Medicare taxes, which could be considered retirement savings in some ways, which is a total of 2.9% (1.45% from both the employee and the employer), bringing the total “retirement” associated taxes at 14.4%. There is an additional 0.9% Medicare tax on all earnings over $200,000.

There is a big difference between money taxed and money saved, and calling money collected from Social Security “savings” is misleading.

[mschuster91]

> If people were allowed to have private retirement accounts with that Social Security money, everyone would be able to retire comfortably.

The drawback of a capital-only pension system is that ever more and more "dumb money" gets locked into things like ETFs - and more and more shares of "safe" companies get owned by entities which have ... questionable interest in exercising their voting rights.

For example, take big oil or coal companies. Their time to live is limited, last but not least because the demand is going to dry up sooner or later. Normally, investors would shed off these shares or at least push the company to sustainable goals - think car companies here: the long term goal that's most beneficial to society is to shift to electric / hydrogen, while the short-term goal that's most beneficial to next quarter's benefit is to cut r&d and sell high-margin SUVs instead.

The other problem that locking huge amounts of money into ETFs presents is a bit more complex: as more and more marker volume is held by ETFs which have to track the base stock get into a precarious position. Assume a stock drops in value because of a large sell-off, bad news, a Presidential Tweet or whatever, the ETFs the funds have to follow... and sell off, creating a race to the bottom due to oversupply (and the other way around). That means that, as more and more percentage of wealth is gobbled up by "dumb money", the remaining traders gain undue influence since they can essentially force the hands of the dumb money.

And then there is the final drawback: a government backed pension scheme like the German one where current employees pay the pensions of current pensioners in exchange for the in-kind promise ("Rentenpunkte") will weather any economic crash as long as the government keeps existing. A capital-based system is in for a nasty surprise in a total collapse event. The 'rona was a warning sign in that case.

[staticman2]

Sure, everyone can retire comfortably as long as we naively assume that stock returns are predictable and will be very high forever.

[jldugger]

> The problem is the politicians control it instead of the individual so the money is not invested but spent.

You're undercomplicating the story of Social Security.

1. The program was instituted with an eye towards applying to everyone immediately, not 30 years from now. You cannot hand out retirement benefits to people using savings that were never set aside; so the program was always pay as you go. Not necessarily a bad thing but considering the government has low borrowing costs, perhaps it should issue some low cost, long term debt to fund the program. On the other hand, investing on the margin like this is fraught, so /shrug

2. There actually was some investment made when the boomer population came around. They were putting in more money than their predecessors took out and thus we have a surplus. Those boomers are now retiring and drawing down social security surpluses has begun, leading to the '75 cents on the dollar' estimates we've seen

3. The actuarial estimate of the cost of running social security relies on predicting variables far into the future, many of which are affected by the rules of social security itself. Longevity in particular has gone up with time.

4. People on average are not great at investing. They buy high and sell low, they buy the dividend, they don't read the prospectus. They're not even great at saving; it's why we had to institute the SS program as mandatory. Folks pointing to their 401k strategy on HN ignores how the HN crowd is a highly biased sample of the population.