Among my random thoughts last weekend I mentioned Social Security and was not surprised to receive a couple of comments on the subject. I guess I was surprised that I didn't get more comments. All of us are in one category or another -- we are either receiving the 'benefits' or we are paying for them. The simple fact is that Social Security clearly seems to be a failing program if not an already failed program. I guess my question to you is whether it is a program that should simply be abandoned or do you see a cure? As with so many things administered by the government there is a great cost simply in terms of paying for the bureaucracy that was created to maintain and administer the program. Those costs aside, investments have been somewhat less than sterling and it seems that some politicians all too often have attempted to divert or "borrow" from the funds. It has been no secret that Social Security will be out of money in the not too distant future. Back in the '80's, at least according to his diary, President Reagan recognized the approaching problem and was urging Congress to work to repair the situation. Now today, more than a quarter of a century later, little has been done other than raise tax payments and defer full eligibility for entitlement to benefits. Take in more, pay out less has seemed to be the solution so far. You are probably aware of at least parts of the approaches favored by the current presidential candidates, but if you aren't, there is a pretty comprehensive article on the front page of the Investor's Business Daily on May 27, 2008.
According to the IBD article, Senator Obama says that letting people invest a portion of their Social Security taxes is a way to "gamble away people's retirement on Wall Street." I disagree. After all, it is the people's money in the first place, isn't it? While some might inevitably invest badly, do they not still have the right to invest their own money as they choose or must they invest as the government says? It is the people who permitted the government to take their money in the first place to "invest" it for their social security. What kind of a job has the government done? I agree that our population in general is not well-educated regarding investments and investing, but I think it is high time that money management, risk awareness, debt control, and investment instruction become part of our public education (and private education) curriculum. Had that been done back in the '80s, those students would now have a much better foundation and be more competent to prepare for their own retirement. Is it time to start that now? I definitely believe it is. Otherwise, do we just keep raising taxes and/or lowering benefits until the taxpayer finally revolts or the benefits become completely meaningless? What do you think? Do you have any solutions?
While you are certainly at liberty to criticize my thoughts, I would suggest it might be more productive, if you disagree with me, to offer your own positive solutions. Criticism of the proposals of others in government has been the standard political fare for decades with no positive solutions offered and, quite obviously, that has solved absolutely nothing. I believe solutions rather than rhetoric are more necessary now than ever.
A wise subscriber last week questioned what would happen to the employers' contribution to Social Security if people were permitted to invest some of their social security money on their own. How about placing that money directly into an individual retirement account for each employee that is invested in interest bearing government bonds? That portion of an individual's retirement would then be reasonably safe and there would be an assurance that it would grow through interest payments. The employee's portion of the tax could be invested in a regulated employee account and, just like the current Social Security, the funds would not be available until a pre-determined retirement age.
I believe this is an important subject and I'd like to see your thoughts on the subject. I don't pretend to have the answers, I only have some thoughts like those I expressed above. The real point, I think, is that we better get a real dialog going in this country and find a solution or at least a direction other than simply continuing to feed a very hungry bureaucracy.
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by Bill Kraft, Editor
Copyright 2008, Makin' Hay, Inc.
All Rights Reserved
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