Q&A With Bill Bradley: Pensions

The Social security makes me feel like a sucker.
I would never participate in a pryramid scheme, but I am required by law to be in this one.

Oh, and Mr Bradley should know that there are some people in this country that save, and do not believe any company or government can be relied on for help.

Oh and that crack about the stock market being a lottery really annoys me.
If you just do a 'quick pick' and buy a stock without knowing what you are doing, you are likely to lose. With a bit of effort, its quit easy to make money in the market. I know because I do it.

But I would rather put my future in the hands of a guy like Warren Buffett or Eddy Lampert that the social security system.

The real problem with Social Security is that for the people who paid in a lot and made a lot during their working lives – they receive a sizable Social Security check. Now I saved 10% of my salary for 17 years and my company matched dollar for dollar for the first 5%. I had a sizable 401K when I was downsized. The sad thing is my husband and I were four months from paying off our beautiful home. Without my large salary we had to sell the large home to have money to live on and purchased a smaller home. That was okay but we had always planned to have the 401K and part of the money from the large house to buy a Class "A" RV and see the USA. I was taught that one fails only if they failed to plan. To my surprise a divorced lady at my church told me she is living on $611. a month social security and can't go anywhere but to church and the doctor. The American Dream is fading for many, unless they work for the government.

Mr. Bradley is pollyannish to an extreme. If he's proud of our Social Security system, he has completely lost his marbles. If Social Security is a relfection of how we treat our elderly, then we are worse as a nation than Pinochet, the Chilean dictator, because he left Chileans a better pension system than we have, which indeed uses a market approach, which Bradley eschews, inspired by Milton Friedman. And that system was put in place in the 1970's! India has just created a marvelous pension system for their government employees that does not burden taxpayors and will provide far better for the retirement of their civil servants, than the heavy burden that less fortunate Americans will have in taxes paying for the retirement of federal workers who are much better off than ordinary Americans. Bill Bradley has no dog in this fight because he has a very generous lifetime retirement guarantee on our taxpayers' dime after spending years in the Senate, where he failed to actually do anything to benefit the retired--why is he talking about this now, rather than when he could have done something helpful, beyond just keeping the solvency of Social Security for a few years, or even decades? He could have proposed a system like Chile's, after all, the model was there for him to imitate at the time he was in the Senate. He's really playing a nasty game with Americans now,and apparently he was when he was inthe Senate as well. Our Social Security system can best be characterized as an intergenerational ponzi scheme run by politicians for their own benefit, and Americans of all ages appear to have been conned by the politicians into believing that it's a great system. Or they're just so angry about the money withheld throughout their working lifetimes that they are willing to become violent if even the minuscule promised benefits are curtailed. The fact that politicians take $50 billion out of the social security funds every year to offset budget deficits, so they can porkbarrel spend in their districts and claim lower budget deficits, and get themselves re-elected, is the sine qua non of a con. No greater scam has ever been perpetrated on the citizenry of any country than Social Security in America. Social Security is a system that promotes poverty in retirement while misleading people into believing that they will be provided for in retirement. As noted above, that creates people living on $611 a month living in utter poverty in old age. The unfunded liabilities are astronomical and Congress cheers itself for not doing anything about it. We are on a glide path to financial ruin and politicians claim virtue by fiddling while Rome burns. Bill Bradley of all people should know better than to laud such a system. But then, he's a politician, not a citizen committed to actually improving the lot of ordinary Americans. His panning of the Stock market, which has created more wealth for ordinary Americans than the government ever will or can, is, unfortunately confirmation of a socialist mentality. Next he will be telling us that life in the Soviat Union was pure bliss, and that we should be aspiring to imitate North Korea in our economics and retirement, after all. And to think that I once admited the man. He has not just feet of clay, but that's the composition of the whole man. Regardless of how far above his natural talent he rose by hard work in the NBA. Far better for citizens to keep their own money and save it (a 5% return in a money market account is 10 times the return they will get on the money withheld for social security, if they get any. And if the Stock Market is so evil, why are large institutional investors putting their funds in it? Even in hedge funds? And what should stop ordinary individuals from tapping the expertise of large institutional investors with their retirment funds? Only incompetent and venal politicians trying to harm them for their potential political gain. Time to wake up America and refuse to allow political hacks like Bradley to impoverish you. Of course, the over-regulation that is killing the economy, and driving money in private investors hands, with publicly traded companies going private, and new entrepeneurial companies that might be created never coming into existence because of Sarbanes-Oxley and the heavy regulatory regime that is now threatening to kill the economy and impoverish all but the extremely wealthy (you have to have several hundered million dollars to invest in the alternate markets that exist outside of the Nasdaq, NYSE, etc. Mr. Bradley actually has nothing beneficial to offer at all for the weatlh of Americans in retirement. And like all politicians, he infantalizes American citizens. He sees us as wards of the nanny state incapable of behaving in our own interest. I'm offended. Better to provide both basic and advanced economic and investment instructions to all Americans. But Mr. Bradley and his political colleagues have insured that our public educations systems are completely dysfunctional and do not educate Americans. All the easier it is then, to con them into the types of solutions Mr. Bradley offers.

Even more important I think would be a 'forced' portability .... i.e. when you leave a company your retirement funds follow you to the next job or remain until you have a next job. in the event of disability or long term unemployment have it go to a type of IRA that cannot have any withdrawals for any reason until age 55.

The instability in the job market often means deep dipping before retirement to cover day-to-day living expenses. This is not the purpose of retirement funds.

So .... I suggest the law beefs up portability and sets rules to keep our hands off any pension or IRA mpnies by not making these funds available until at least age 55 which is often an early retirement age.

Kent -

The reality is most employees do not want and resist taking charge of the investment side of their retirement plans. Many do not feel comfortable even after investment advisors talk to them about funding options. They feel vulnerable and simply do not come from backgrounds that encouraging the type of thinking needed to make wise decisions.

Kent,

Your comments demonstrate a gross lack of understanding of the Social Security system, probably the most effective system ever devised by the federal government for the intended constituency and also the most efficient from an economical standpoint!

Social Security does indeed, face a shortfall in about 2041 or 2042 and will be only able to pay out about 75% of what they should unless reasonable steps are taken to correct this problem. You must remember that Social Security is not a savings plan for retirement. It is an insurance to protect all workers against disability, their children and widows against loss of income and provide a supplement to their retirement in their old age! It does that very well and I know of no plan tendered by anyone which will adequately replace this!

The stock market would be a joke for a young person without enough years to pay into it. It might be great for someone who gets in all his years and closes out when the market was in good shape. No such plan ever had the portability needed to be a meaningful plan.

The insurance companies had their chance many times over to come up with a meaningful plan but never seemed to have the interest. One of the things they would have had to do was lobby congress to prevent such plans being attached for indebtedness as is Social Security. It would have had to have the insurance component to protect those who needed that protection. It would have had to have total portability as has Social Security. It would have had to operate within fixed parameters over a very long time which the insurance companies would not have liked or approved!

I don't go along with Bradley's idea of putting $5,000 in an account for someone by the government as I believe that all money in such an account should come from the combined contributions of the worker and his or her employer!

Whatever the plan, it needs to incorporate several things. First it needs to be mandatory so everyone on every job contributes, no exceptions. It needs to be automatically portable so whenever someone goes to work they also start contributing from that job. It needs to be un-attachable so that it doesn't start accumulating money only to be wiped out by a lawsuit. And it must contain the necessary insurance cmoponent.

The mechanism is in place to accomplish this with the current Social Security system and we should be very reluctant to throw that baby out with the bathwater!

So, James C. and Anita Dehghani (beautiful name, by the way--can you tell me its origin?), you both sound to me like you approve of the privatization of Social Security. Instead of the funds being paid into the so-called Social Security trust fund, which is a bunch of IOU's, already spent by the government, all of the funds could be placed in to accounts belonging to the individual, with restrictions on when the funds could be distributed, like, say, most university retirement plans administered by TIAA-CREF, only with defined contributions instead of defined benefits, with insulation from creditors and litigants, as IRA's already are. I agree with this. This would address the concerns you both express, completely privatize Social Security as a retirement account. Disability insurance could be purchased as private insurance for individuals, with a small portion of the funds going into Social Security, and you would essentially have solved the problem and provided for vastly suprior financial resources for all. The accounts would remain the property of individuals, and follow them throughout their lifetimes in whatever job they work (forced portability, which we already have with IRA's). But both of you, in seeming to suggest these fixes, seem to agree with me and make my point. The problem is that these changes require Congressional action, not just innovations by insurance companies, which are too tightly regulated anyway, and the Congress won't make the changes, and people, ill informed by design, and easy to demagogue, are leery of the changes, and rush to support the political Elmer Gantrys who promise them the moon while leading them into oblivion. But to continue on our same course is financial suicide. The baby boomers, of which I am one, will break the system, as you're all well aware. And part of the problem currently is that people are reluctant and frightened to take responsibility for themselves. THis is the result of several generations being led to believe that the government will take care of them. This has all but destroyed our society and created poverty where none needed to exist, even in the face of the most affluent society ever to exist. Exchanging freedom for security, as has been pointed out, will provide neither. Consider Robert Frost: "Even the bravest who are slain shall not dissemble their surprise, on waking, to find valor reigh, even as on earth, in Paradise. And where they sought without the sword wide fields of asphodel forever, to find that the utmost reward of daring should be still to dare..." Lyndon Johnson created a system that has directed more money to alleviating poverty than in the history of the world with his great society, but the result has been abysmal. It seems apparent that the mind set of Americans is poverty and dependency, rather than self-sufficiency and affluence. Our entire society needs to shift its approach in a massive way, to empower individuals and their families, not to create dependency and destroy individuals, families and societies, as our current social policies are designed to do. Or pass our errors on to future generations. We need to pay for ourselves, and leave more resources for our children than we ourselves enjoyed, not vice-versa as my extremely narcissistic and self-indulgent boomer generation wants to do. Our schools are a shambles, our governmental institutions are absolute jokes. Our courts don't dispense anything resembling justice, just vast sums of money. Our international institutions are corrupt to the core. Our legislatures are all corrupt to the core. Our experiment with democracy is just about over. And we rush along the path of destroying ourselves and our nation, with apparent glee and nonchalance. My generation is in the process of destroying Western Civilization and seems happy about that. One can hardly look at the mess we've made of our institutions without almost starting to believe that this was done with vicious intent, to empower a small oligarchy with virtually unlimited power while making sheep out of the rest of us. Those people who don't want to take the initiative to save and invest their own resources are hurting themselves, as well as their families and the rest of society. They should be supported and encouraged to do so, whatever the effort required. They need and deserve a far better education than is provided them in our public schools, which is abysmal, and is a major contributor to the fear and unwillingness to pursue ones own future and happiness. They need to be empowered, not scared into deferring their well-being to the government. That's the ploy of the politicians. I have interacted with people from all social contexts around the world and have come to recognize that all individuals have the fundamental capacity to pursue their interests and take care of themselves. With the help of just their families and the voluntary good will of their immediate communities, they are far better off than with any help from even state, let alone federal, government programs. Provide physical security (Defense and good policing) and people will take care of themselves and their neighbors. A neighbor with a car and a heart would get you out of New Orleans expiditiously, but FEMA with all its resources won't. Nor will the city nor the state. And what does our all-wise government want to do, in a bipartisan fashion? Use your and my tax dollars to rebuild public housing in New Orleans and pay to move the displaced residents of that public housing back to the city, which is sinking while the coast is eroding, the levies are not rebuilt to even withstand a category 3 hurricane, and Al Gore tells us that sea levels will rise and hurricanes will get stronger. Our federal government, with bipartisan acclaim, wants to put all those most dependent individuals right back in the eye of the storm, to suffer in the Convention Center or the Superdome again, Democrats so they can exert political control over the city and the state (God forbid that Bobby Jindal become Governor) and the Republicans because they lamely don't want to be seen as racist. So indeed, James and Anita, you both need to wake up quickly and see where our government social policies are taking us. You can take to the bank the observation that our nation will disintegrate, a la the Soviet Union, before the end of the century unless major changes are undertaken. And, yes, unfortunately we have no stomach for change or effort. Bread and Circuses are all we want, with the Barbarians at the gates. Hence people like Kate Moss are considered our best, brightest, and most influential (at least according to Time magazine). Anna Nicole, Imus, and all the usual suspects are the main focus of our concerns. Heaven help us! You'de think we were the Weimer Republic, without Brecht. Think of Europe in the aftermath of WWII. The world we're headed for before the end of the century will be far worse, if we continue our current blithe path, blithe spirits. If we survive as a species at all. Think about it. And believe me, I understand the difficulties. Right now I'm fighting my employer over non-elective safe harbor employer contribution to my 401k, as my employer has grossly violated federal regulations (the contribution is due on the last day of the plan year, December 31 in my case, and my employer will not provide any straightforward answers as to why they haven't credited the funds, to me or anyone else in the company. Even my physicians colleagues (I am an employee of a non-profit organization) are unaware of the problem. So I'm incurring the wrath of my employer all by my lonesome, on behalf of myself and all of my colleagues,who are either unwilling or afraid to join the effort. Yes, I know, I grossly misunderstand a lot of things, but, I will find out, if there is any way I can. And unfortunately, I am not sufficiently enlightened or persuaded by your comments, James. My understanding of the system has not increased. Hence, my perception of the program is not changed. I have proposed plans, which either fall on deaf ears, or regarding which I am forcibly silenced.

Kent,

Thanks for your rather lengthy comments! You misread my comments as I don't approve of SS going private in any way! We've got a cost effective program than is needed. A program that works. A program with a proven efficiency. A program that cannot be emulated by private enterprise as they would never accept the restrictions and commitments necessary! If they would, that would be OK but that's not going to happen.

Nor is Social Security going to be done away with. They couldn't afford to! The sum total of a nation's civilization is in the way they treat the least of their members and that includes the elderly, the children, the sick or disabled and the mentally disturbed. I don't believe you realize just what it would cost to address these things with private insurance on an immediate basis! Remember, that private insurance takes about 30% off the top for profit and golden parachutes!

I harbored no illusions about changing your mind as it sounded like it was set in concrete in your previous comments. My only goal is to help you understand why not everyone thinks like you and still are not into the idea of a "nanny government."

Go back a number of years and research why the SS program was even conceived. To get rid of the "poor farms" was a major part of it. And we don't have these county farms available to us today. The extended family with 10 or 12 kids to support the old folks in their final years is no longer a part of our culture. The Social Security system has worked beautifully for close to 70 years and is a valuable resource to both the recipients of any portion of its services as well as the merchants and others who collect these dollars to recycle when the beneficiaries spend them.

If our nation "disintegrates" as you states it will not be because of Social Security but more likely because of the wars which we shouldn't be wasting our resources on and the fact that we spend more on military than all other nations combined! What are we afraid of, having to get along with others in the world?

There are a lot of things that I don't like in our government and the way things get done. That does not mean I want to change our basic form of government as it is still the best in the world IMHO!

You may be right that our experiment with democracy is just about over. Just look at the Patriot act and see what it had unleashed in this country! It is imperative that we stop this move toward a fascist state before it grows! I recognize that some consideration must be given to the massive increase in our population in the past 70 years but I still tend to think like G. Gordon Liddy when he wrote "When I was a kid this was a free country" as that well epitomizes my thoughts.

Your problems with your employer and 401K have my sympathy! This is typical of private and corporate type situations. And you frequently have no recourse. I guess just be glad that you have a 401K as they were not around a hundred years ago. I hope you get yours straightened out successfully. Are you tho only one with a problem? And why can't you at least attempt to get some others to complain with you?

You talk about a neighbor with a car and a heart getting you out of danger in the hurricane quickly and I must remind you that when they got to the next burrow or whatever they call it down there and are met with police and sub machine guns sending them back, that won't work.

Actually most of what you wrote is interesting and I'm sure reflects you feelings but is still in no way germane to this discussion! I'm just cherry picking a few of you comments on which to replay.

And one of these is the public schools! They, at least in the west, have gotten a bum rap for a long time and someone needs to speak up to correct this! For the most part our kids are getting the education they need with the exception of low income kids not being able to afford college. Nothing new there, the same situation existed is spades when I was young! But the public schools are preparing successfully most children who will be come Lawyers, Doctors, Scientists, future teachers, astronauts and various other fields with high educational requirements! This thing was started with people saying that "everyone knows" the schools are bad. It has been repeated enough times that many believe it now. Or, more commonly, "schools are bad although ours here in River City are pretty good." Nothing is mentioned about the support schools get from home or the impact of television which kids listen to more hours than they are in school! And I've known a lot of teachers, good and bad, in my life. I'd say that 90% were caring individuals who's first desire was to get knowledge into the heads of their students. Is the system perfect? Of course not, what is? But for all bad public schools, that dog won't hunt! Let him die a natural death!

You mention being forcibly silenced. By whom? We are supposed to have free speech but we are all aware of the limits on that! Like a Walmart employee saying the word "union" where the wrong people can hear! Hope you get it solved!

I agree with you wholeheartedly that those who would exchange freedom for security deserve neither! I've quoted that often.

You mention insurance companies being "too tightly regulated" and there I must take issue. I've had mush dealings with insurance companies/financial groups (you can't tell where one ends and the other begins) and I've found they are really not answerable to anyone in the final analysis. I've hired lawyers and found that the insurance company can keep you tied up in court until you have no money left with which to continue the fight. The state insurance commission has no authority to step in over matters of contract law. The attorney generals office is off limits as that is all up to the insurance commission! If the amount is small enough to force it into small claims court they'll not continue the fight once they see you're serious but anything else and you're out of luck.

Doctors cannot tell you what they charge because "it's up to the insurance company." What's the price on this implant? Don't know because it depends on your insurance! I've been there and speak from first hand experience! Bottom line is the insurance/banking community has proven to be very poor stewards of American health care payment and deserve to be eliminated!