[elevation]

> Social Security replaced with an index

Yes please!

I learned just how bad of a deal Social Security is when an employer (a bootstrapped startup) offered a predatory 401k plan. It was free for my employer to setup but the employees were stuck with extremely high fees. It was so bad that John Oliver made an episode[0] about it!

Yet, even for the worst 401K plan in America, the projected retirement returns were 1600% of the Social Security returns. Even America's worst 401K would be better for the average consumer than the federal debacle

Uncle Sam should sunset SSI and allow citizens to select from and move freely between a number of accredited funds.

[0]: https://www.youtube.com/watch?v=gvZSpET11ZY

[altcognito]

Are you aware that SSI is an insurance (or lifetime annuity) not an investment?

SSI covers disability, and supplements income no matter what happens. Disability? You're covered. Live to 105? You're covered. Market dips 50% in a period you have a lot of expenses? Your benefits are unaffected.

Tax advantaged 401k is already the vehicle of choice for retirement funds.

[elevation]

> Are you aware that SSI is an insurance

Insurance is an effective tool for managing unlikely risks -- few people will be rendered unable to work early in life, so with a large pool we can cover these cases with only a small per-person contribution. What makes SSI ineffective is that it is also liable for a broad eventuality: most everyone will age.

When any self-interested person plans for a far-off expense, they will save up principle, and manage it to yield interest as well. But the government isn't looking out for your interest; instead of investing or growing funds on behalf of the people, the congress and administrators spent down the SSI nest egg leaving no principle to manage. Today it makes payments only as money comes in.

SSI is run worse than Enron. Citizens should be allowed to invest their own earnings elsewhere.

[altcognito]

I like this comment because it seems well thought outA couple of points:

> When any self-interested person plans for a far-off expense, they will save up principle, and manage it to yield interest as well.

The reason the current system came about is that people were unable or unwilling to save. Half the money that goes into SS comes from your employer, a hidden benefit to most. You think you're gonna get that money in returned wages? Do you think that people are MORE likely to save today than they were in the early 30's? My parents outlived their nest egg. Even SS isn't completely keeping up. How many people dying on the streets are you willing to tolerate. This isn't theory, this isn't being dramatic, this is what is starting to happen today with medical expenses. It's largely hidden, but it happens NOW. We need more social insurance, not less.

> ..instead of investing or growing funds on behalf of the people, the congress and administrators spent down the SSI nest egg leaving no principle to manage. Today it makes payments only as money comes in.

It is not strictly the case that SS doesn't invest, even today. It just chooses low risk investments. Copy pasta - (Social Security does not invest in private stocks or bonds because it operates on a pay-as-you-go system designed for security, not high returns, and is restricted by law to investing only in special-issue U.S. Treasury bonds. The system acts as insurance against poverty, requiring a guaranteed, non-volatile asset base to pay promised benefits.The combined Social Security trust funds have approximately $2.56 trillion invested entirely in special-issue U.S. Treasury securities. )

Fundamentally, if you have a problem with the way the government manages the money, fix the management, don't blow up the system. We've been blowing up the system for decades, doesn't seem to be helping at all.

[Ajedi32]

1600% higher returns can cover a lot of eventualities.

[compsciphd]

it doesn't cover you getting disabled so you can't work anymore at the age of 30 after working 8 years.

1600% higher return is great when you work from yours 20s to your 50s/60s and can essentially self insure yourself at that point with it, but as the person you are responding to you is (I believe) trying to say, that's not everyone.

[Ajedi32]

Fair, but given that we're talking about a hypothetical government program, "index-based retirement fund" doesn't imply you're the only one contributing to said fund.

[compsciphd]

in the country I'm now in somewhere around 18% of my salary is basically put into my "pension" (basically equivalent to a 401k). around 6% from my salary, around 6% match from employer and around 6% for severance (that one gets when they leave said employer, but can stay in pension, and most reccomend it stay there unless you really need it to make ends meet as otherwise pulling out 1/3 of your pension contributions).

This is external to disability insurance that we and our employers also have to contribute to. So I'd agree to a large extent that the govt forcing employees and employers to contribute significant amounts to 401k like programs could be in the interest of everyone in the USA but one needs a disability insurance program on the side as well and that isn't particularly cheap.

[rainsford]

> Uncle Sam should sunset SSI and allow citizens to select from and move freely between a number of accredited funds.

But how does the government actually do that? This feels like one of those ideas that sounds OK right up until the point where you try to map out an actual plan with more detail beyond the word "sunset".

If current Social Security taxes fund current payouts, how do you redirect those taxes anywhere without cutting off current Social Security recipients who spent their entire lives paying into the system? Even those still working have spent some portion of their career paying Social Security tax. Do they get a lump sum payout they can invest (from where?), a limited annuity in retirement (paid for by who?), or is that just money down the drain?

I'm not even necessarily opposed to the idea of changing Social Security into something else, but I'd love for any proposal for doing so to come with something that looks even remotely like an actual plan.

[trunkiedozer]

Absolutely!