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Legal
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Social SecurityWhy The Fight On A Fix?Most people who explore the Social Security system soon realize that while it has good intentions, the system is a poor investment and is very poorly operated. When you consider that a person pays approximately 6.2% of his or her income into the Social Security system each year, that can amount to a good chunk of change over that person’s lifetime. Now consider that your employer must also pay 6.2% into the same system. This amounts to approximately 12.4% of your salary being paid into your Social Security account. To round things off, assume a person is making $100,000 a year. This means that person has invested $12,400 per year in his account. Assuming that person works at least 40 years before retiring, he or she has approximately $480,000 deposited into the Social Security system. If that person receives $3000 a month, which is the maximum pay out today, it will take 16 years just to recover the principal. If we add 5% interest, most retires will die before they can recover the amount of money thet was paid into Social Security especially if they wait till 67 instead of 62 to retire. Perhaps this is why the opposition to Social Security private accounts is so strong. Social Security is just another way to redistribute wealth. Social Security is used to tax the working rich while rewarding the working and non-working poor. Now, I’m not saying we should kill Social Security but I do think we should make it fair. Why shouldn’t an individual have the right to invest a portion of his or her Social Security tax in such a way as to be able to pass that invested money and its earned interest on to someone other than the government? Private Social Security accounts will cost - nothing is free; however, the Social Security system as it is currently set up is more for the government’s benefit than it is for the individual’s benefit. Social Security money provides the government with relatively inexpensive money to spend on whatever our congressmen decide. Social Security money is borrowed by the government at very reasonable interest rates. It’s such a good deal that there are more IOUs than hard currency in the so called trust fund. When the IOUs come due, who pays them back? We do - that’s who. And how do we do this? By higher taxes or lower benefits to support a government that shows very little fiscal self-restraint. We need a discussion on not only fixing but improving Social Security. Those who say there is plenty of time are refusing to accept that time is required to accomplish any real fixes and waiting will only add to the cost. Sure the income cap can be raised, the retirement age increased, or means testing can be implemented but this only helps the government not the individual. Yes, the benefits can also be reduced but why the outcry against private accounts. Why is that our congressmen (or congress people) can find plenty of money to fund their pet pork projects that help get them re-elected but they cannot find money to fix a broken and inefficient system? The primary opponents of Social Security private accounts care more about the government controlling how and when the average person can retire than in allowing the individual the freedom to determine his or her own retirement. Unless you make $100,000 plus a year it is difficult to save and invest in a retirement account after having to pay your 6.2% of your income into Social Security. When Social Security was first enacted, most people didn’t live long enough to collect. You cannot convince me this wasn’t intentional. From the very beginning Social Security was just another way to extract more money from the people while the government promised to provide a possible future, beneficial service. The fact that Social Security does help some people is more of an accident than a planned outcome. To be fair, I think Social Security is a good deal for those of retirement age today because they may well receive more than they put in, especially for those that made less than $30 to $50,000 a year. However, once your income level approaches the $100,000 mark, in most cases you will pay more than you can expect to receive, unless you allow for zero or negative interest return on your Social Security taxes. Private accounts do not fix the solvency problem of Social Security only more money or less benefits can do that unless Congress is willing to look at ways for Social Security money to earn a better rate of return than it does now. If Social Security payments are thought of as a tax, all payments should be deductible. If not, Social Security retirement benefits should not be taxed regardless of the individual’s income. Double taxation of retirement benefits is unacceptable. The fixing of Social Security is a classic power struggle between those that believe in the power of government and those that believe in the power and freedom of the individual. Author: Don Miller
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2005 Articles |
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