It’s difficult to pick up a newspaper these days or turn on the news and not hear the talk, both pro and con, for privatization of the Social Security system – especially after Wednesday night’s State of the Union address.

On the Westside of Los Angeles, where most people don’t have to worry about their retirement dollars if the equity in their house continues to rise at this rate, the talk is whether or not the government will really allow people to invest the money however they want and whether real estate will be one of those benefactors.

“It could be a huge boom to the real estate industry,” a friend commented over coffee this morning. Imagine how attractive it would be to invest Social Security dollars in real estate if people keep reading about the double-digit returns, especially for those who have been earning less than 1 percent on their investment in a money market account, he added.

“Do you really think that there will be freedom to invest this money in anything but Wall Street?” I naively asked. “Stocks, bonds, funds, etc.”

“Absolutely,” he continued. “At the end of the day these changes are going to be all about compromise and the real estate industry is going to be a huge benefactor.”

Driving home I pondered what my friend had said. There are already shortages in inventory in every price range for new home buyers. I can’t even envision the madness that would overtake the market if people somehow could manage to funnel their retirement funds into speculative real estate deals or investment properties. When I suggested this to other friends, as well as my husband, their eyes rolled.

“The idea that hundreds of millions (if not billions) of dollars would potentially flow into the real estate sector is mind boggling,” one commented.

“Already, rents are not rising as fast as the payment on units for investment properties based on the benefits of a 1031 Exchange,” another friend said.

Fortunately, we’re talking about 4 percent of approximately $87,000 of income per year or $3,480 per year. That’s not even enough for 5 percent down on a house in Los Angeles, where the average-priced home exceeds $400,000 as we speak.

At the given rate of price increases, which have been 10 to 20 percent per year over the past few years, and the decreasing value of our dollar, will the money really be put into something we can count on for retirement in our golden years?

Fortunately, I’m not ready for retirement. However, out of curiosity I went online and used the automated calculator on the Social Security Benefits Web site to see that, in today’s dollars, the maximum benefit that I am eligible for in the year 2029 (which I offered up as my retirement date) is $2,685 per month.

That’s not even enough to pay the principle, interest, taxes and insurance for the average home in Los Angeles – much less the gardener or the pool man.

So I guess we’ll soon find out what the President is thinking on this subject since the administration is great with marketing. The no-benefits-cut-to-anyone-over-55 was a genius maneuver.

As for me, I guess I’m taking bets that, whether it really pencils out or not, some sort of real estate investment will be slotted into the proposed programs that are on (or off) the table in the end.

Julie Brosterman is a consultant to the real estate technology, mortgage and servicing industries. She lives in Los Angeles and can be contacted at


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