Social Security and You
The Washington bureaucrats continue to not come clean with the American public. The Social Security system can not continue if the program is not radically changed.
When FDR started this “pay as you go” system of income transfer and distribution (sounds a little like the old Socialist “manifesto”) it was designed for the truly indigent to provide a base retirement benefit. In 1933 there were 72 contributors paying for each recipient. Eligible participants received benefits starting at age 65, yet, life expectancy was age 62. The system became flush with cash. Wanting to insure votes Congress provided more benefits and expanded benefits. Presently, 1 out of every 4 Americans receive some form of benefits (the retirees are among the smallest percentage getting benefits). Life expectancy has risen to the mid eighties. There are less than 2 contributors for each beneficiary. The baby boomers are now approaching retirement. Does anyone see this massive collision course in front of them besides me? Sure, there are some in Washington that see it. For one, President Bush tried in vain, to present it, but, the media, certain congressmen and other lobbyist did want to lose their power by allowing change. I also throw a lot of blame on the American public as they were so apathic. Americans are not good at planning long term, especially financially.
Instead, the American public will allow for the system to go broke and be faced with MASSIVE changes to the system. A small change now could avert the coming doom.
Unfortunately, the Bush administration is rumored to be ready to cut a deal with the Democrats. (This has been in the works for a long time). Future benefits would be means–tested; the cap on income currently being taxed ($97,000 in 2007) would be lifted or eliminated (just like Medicare); the age in which beneficiaries can draw benefits would be lifted to 70 or 75; and future indexed benefits would change. Instead of allowing private accounts Congress would allow Super IRAs.
These proposed programs are a disastrous plan for you. Instead of worrying about when the system will go broke, Americans should own their Social Security retirement plans, not Washington politicians. Our country is wealthy enough to cover current beneficiaries as well as those entering the system in the next ten years.
The debate: What should be done for young workers. American workers should own their own retirement plans just like most Americans should own their own homes (have you ever seen a government owned and operated housing project? Get my point?). When the government owns anything there is no accountability.
A comprehensive plan set out by the American Institute for Full Employment (www.americaislistening.org) called the 7.65% solution is worth considering. The bold plan calls for the entire portion contributed by you, 7.65%, would go into your private retirement and health account. It has sensible restrictions on how the money can be invested. In addition the remaining monies in the fund would really be placed in a trust fund and could not be spent on congressional pet projects.
The system would give you choice. When you retire you can choose to get benefits from the traditional Social Security System or use your own account. Yes, you could take the greater of the two.
If you are not financially independent, are over 25 years old, and are making your retirement plans contingent on some benefits from social security, then you better contact your representative now. Tell them you want your own private retirement account instead of social security.