AARP Opposes Private Social Security But Offers Own Investments

The President has tried for several years to get a head of steam with regard to privatizing Social Security. There are those who refuse to discuss the issue and flat out deny the benefits of allowing individuals to invest their money in private accounts. This makes little sense since the rate of return for the government is less than 1% and private accounts always do much better than that. The idea that private investing is dangerous and that people could lose money has an element of truth but is ridiculous given that the government will not be able to sustain the growth of Social Security pay outs. The system will be insolvent and people will lose money so where is the safety in this approach?

The AARP adamantly opposes privatization of Social Security. They do not believe that it will be helpful and they misinform their members about this. One can hardly blame them because there are many different calculators out there than can show either a gain or a loss depending on the model used. In addition, the AARP benefits from a show that leads members to believe they are fighting in their best interests. This is the AARP position on privatization:

Private accounts that take money out of Social Security are not part of the solution. These accounts drain money out of Social Security, cut benefits and pass the bill to future generations. And while recent proposals for progressive price indexing begin with a good idea—protecting the lowest-wage workers—they go too far and cut benefits too deeply for middle-income Americans. We will not waver in our commitment to Social Security and will remain firm in our stance against any plan that takes money out of Social Security. AARP Bulletin

AARP contends that any plan that takes money out of Social Security is not good. What they are saying is that allowing you to decide how to invest your money is not good because, after all, you are not bright enough to handle that burden. AARP fails to mention that allowing people to invest will bring a higher rate of return and give them more money in retirement. They also fail to point out that money put into the Social Security coffers relieves a person of ownership so if he dies the money paid in does not get passed to his heirs. With private accounts, the money that is invested and earned remains the property of the individual and that person alone decides how it is distributed upon his death. The government and AARP do not like it when they lose control of other’s money. They do not like it when people are empowered to make their own decisions. Fueled by the idea that we need to rob from the rich and give to the poor the idealists on the left fail to acknowledge that it is not each individual’s responsibility to pay for everyone else.

Interestingly, the AARP opposes you being allowed to invest your money if it comes from the pot of money that pays everyone. They are, however, very willing to have you participate in the life cycle funds they provide. You see, to the AARP you should not be allowed to invest your Social Security deductions but you should take a lot of your “other” money and invest it in their retirement funds. This points out one very important concept and that is, AARP is admitting that Social Security alone will not provide adequate funds in retirement. They know and admit that you need other funds and investments to have a comfortable retirement and they are willing to provide that, probably for a fee.

Life-cycle funds are gaining traction with investors who want to simplify, but this booming mutual fund category still requires a sharp consumer’s eye.

Assets in mutual funds that automatically rebalance toward a specific target retirement date grew nearly 70 percent in 2005 over the previous year, to $70 billion, according to the Investment Company Institute, which tracks industry flows. Of that, $48 billion was in employer retirement plans.

In addition to industry leaders Barclays Global Investors, T. Rowe Price Investment Services Inc., Fidelity Investments and Vanguard Group Inc., among others, the AARP has launched its own target retirement funds. And the federal government is about to complete its first full year of offering its own target-date funds in the federal Thrift Savings Plan, the retirement fund for federal workers. Baltimore Sun (emphasis added)

So I want to know, if investment in life cycle funds are good and provide adequate money for retirement, why can’t people put their Social Security deductions in life cycle funds? Perhaps the AARP and the government do not want to release the iron grip they have on the lives of seniors. After all, Social Security is always a hot button issue around election time and the scare tactics are very effective. To many seniors, the thought of eating cat food and going without medication is enough to allow them to become single issue voters. I for one will never, ever belong to the AARP. I would rather pay full price for my meal at the Horn and Horn.



Print This Post

If you enjoy what you read consider signing up to receive email notification of new posts. There are several options in the sidebar and I am sure you can find one that suits you. If you prefer, consider adding this site to your favorite feed reader. If you receive emails and wish to stop them follow the instructions included in the email.

One Response to “AARP Opposes Private Social Security But Offers Own Investments”

  1. Uncooperative Radio Podcast 08-11-06…

    This is completely opinion, we are moving back to how I did my radio show, more talk on politics. Since the player functions fine at a 21k connect speed, I am no longer limiting myself to 30 minutes. However, I won’t try to go any longer.
    Yesterd…