Washington Post: when world ends, poor to be "hit particularly hard"
Washington Post, on the risks of private retirement accounts:
Because Social Security is often the biggest or the only source of retirement money for the poorest Americans, low-income workers would be hit particularly hard if the markets plunged and they were left with smaller benefits than they would have received under the current system.
Yes, if the markets plunge for 20 years or longer, the poor will have problems. So will we all -- and retirement security probably won't be the most pressing among them.
Under any reform Congress adopts, participation in a partially privatized Social Security account is sure to be voluntary. People who believe that such accounts are unacceptably risky can remain fully invested in the current Social Security program. But I'm thinking they should make their choices and let us make ours, eh?
Secondly, the privatized accounts will be made up of regulated, long-term, diversified investments:
In devising a structure for the private accounts, the Bush administration is modeling its proposal after the Thrift Savings Plan, a tax-deferred retirement investment plan similar to a 401(k). The idea is to minimize risk for people at the outset by offering as few as three to five diversified investment funds.
Under the emerging Bush plan for Social Security, the default investment would be a "life cycle" account. It would begin with investments that have greater potential for both risk and reward and shift to safer bonds as a worker ages, officials in and outside the administration said.
Or, as the Heritage Foundation puts it:
"Life cycle" accounts ... automatically [reduce] the proportion of stocks as the worker gets older, thus locking in past gains and sharply reducing the chance of major losses in the years approaching retirement.
Finally, opponents of PRAs assume that the current system carries no risk. But that's by no means certain. When, beginning in 2018, Social Security starts to spend more than it collects and the Government is forced to grapple with an empty "Trust Fund" -- which holds IOUs, not cash -- we're going to have cut benefits or raise taxes or both. How do we know that the voters of tomorrow will accept the sharp tax increases that'll be necessary to pay scheduled benefits?
UPDATED: Additional illumination from the always sharp Kip at A Stitch in Haste. I especially enjoyed this snippet (emphasis in the original):
Social Security, under DOMA, is the mostly blatantly anti-gay federal program ever conceived -- far worse than "Don't Ask, Don't Tell" (both of which, incidentally, courtesy of the Democratic pervert-president, Bill Clinton). Partnered gays are 100% screwed under the current system. If you're gay and you don't know about the Social Security spousal benefit and how it's affected by DOMA, then, with all respect, you have no idea what you're talking about. Learn the facts, and get mad. Very mad.