What Privatizing Social Security Would Mean for Your Retirement Plans
GOODBYE, WASHINGTON. Hello, Wall Street.</br></br>I am not a political columnist, and I have no desire to argue over the merits of privatizing Social Security. Still, for those of us who are investment junkies, it's time to start paying attention, because it looks as if this thing could actually happen.</br></br>Which brings me to today's question: What would privatization mean for our finances? Here are three insights.</br></br>-- Betting on bonds. When pundits discuss privatizing Social Security, there's much talk of Americans investing their payroll taxes in stocks. But if folks are logical, they will end up owning more bonds.</br></br>After all, when we contribute to Social Security today, what we are buying is a future stream of inflation-indexed income, not unlike we could get by purchasing inflation-indexed Treasury bonds. Indeed, because we know we will get this income stream, presumably we are a little more aggressive with our individual retirement accounts, our 401(k) plans and our other retirement savings.