Reform Plans for Social Security

Re “Social Security Panel Offers 3 Reform Plans,” Jan. 7:

The American Academy of Actuaries has examined two distinct ways to privatize the Social Security system--investing Social Security trust fund assets in the private market and/or moving a portion of the Social Security contributions into individual accounts--and concluded that both are feasible.

However, before drafting legislation that would mark a departure from the system’s basic philosophy of providing a floor of retirement savings for most Americans, Congress must consider several questions. Will private markets continue to yield high rates of return after a huge infusion of Social Security assets? Will higher costs erode those returns? Will workers be permitted to spend their accounts before retirement? Will government respond to retirees who spend their individual accounts too rapidly? How will the government respond to the decrease in revenues from privatizing Social Security investment?

The focus on proposals for individual accounts may draw attention away from the fundamental problem of funding benefits for the baby-boom generation. A move to individual accounts does not avoid this problem, it merely changes the context in which it must be addressed.

LARRY ZIMPLEMAN

President, American Academy

of Actuaries, Washington

* The Social Security advisory panel report seems to me to be advising the wrong thing at the wrong time. Whereas “chasing the market” when it is at an all-time high may benefit stock brokerages and their contributees, we need only look to the tender treatment of Orange County’s funds or the selling of “junk bonds” to savings and loans to see that self-interest is one guiding principle of these investment entities, with rare exceptions.

JOHN E. SCHONEBERGER

Los Angeles

* “No Security in ‘Personal Security’ Plan” (Commentary, Jan. 6) is another plea by advocates of the political establishment that somehow government knows what is best for me and can invest my money more wisely than I can. Social Security has run a surplus of funds for a number of years and the politicians borrowed that money to buy treasury notes to pay for the budget deficit. In 2014, not 2020, all of us and our children and grandchildren will have to pay both the interest and principal on these T-bills, as higher taxes, when the surplus disappears.

As a small businessman and employer who pays not only my own Social Security but over $1,000 a month in matching funds for employees, I am appalled at the fiscal incompetence of our government. I would gladly give up all my future Social Security benefits (a fund I have paid into for 30 years) for 15 years of investing 15% of my income myself.

JAMES DEMETER

Woodland Hills