I think I received more comments last week about the Social Security issue than on any other article I have ever written for the Newsletter. As might have been predicted, the commentaries ran a very wide gamut. Most of the comments were very thoughtful and offered suggestions that could improve the system and the returns on investment. One commentator seemed to suggest that there was no problem so no fix was necessary. Others advocated some very substantial reforms. One writer suggested that the retirement benefits Congress receives should be blended into Social Security so the people (as in "we the people") and members of Congress would be playing on the same field when it came to retirement benefits. That idea didn't seem unreasonable to me. Why should members of Congress get a better retirement deal than the general populace? Is that at all fair?
When discussing my thought that mandatory financial education may help people ultimately fund their own retirement, I was surprised by the negativity of many of the comments. One person said simply that people are too stupid to understand. I agree that some proportion of the populace may not put the effort into absorbing the information, but I don't think that is a reason to deny the education to others in the public schools who would benefit. Some people are not cut out to learn algebra, but that doesn't mean it shouldn't be taught, does it? Other commentators pointed out that many people are unwilling to learn while still others suggested that people with families had priorities more pressing than preparing for their retirement.
Obviously, each of those comments has at least some merit. Is the answer, then, to just forget the idea of adding to the financial or investing knowledge of the general populace? Yes, families may have difficulty putting aside money to invest, yet many seem to have little trouble buying on credit where they pay annual interest rates of more than 20% on their credit balances. It is tough to put anything away for retirement if you have maxed out credit cards and are paying 22% on the balance. If those families had had the benefit of some financial education, might they have avoided the credit card trap, sacrificed a bit and waited until they had cash to buy the luxuries rather than put it on the credit card for instant gratification? God forbid -- that isn't the American way. With the sacrifice of a little patience, those families would have the 20%+ of whatever the credit card balance would have been to invest. Would that help? It certainly couldn't hurt could it?
One writer suggested Social Security only be paid to those who "need it" and should be paid for by those who don't need it. I thought the system of "from those according to their abilities to those according to their needs" was a financial and political system that had proven itself unworkable. The philosophical question is whether those of us who do are financially responsible for those who don't. Most would agree, that those of us who do may, indeed, have some responsibility for those who can't, but why for those who just don't? Even if one agrees with the concept that those who "need" Social Security should get it and it should be paid by those who "don't need" it, I am curious as to who will make the decision of who "needs" and who doesn't.
I guess that one of the more common and striking views to me is how many folks believed that the general populace should not be permitted to manage their own retirement money because of their perceived incompetence. If that is really so, why should they be permitted to manage any of their money? How is it that they can manage the remainder of their money but not their retirement money? If they are incompetent to manage one part of their money how can they be competent to manage any other part? Logically, should they be allowed to manage any of their money at all? Would anyone who argues that people are too incompetent to manage their own retirement money also contend that the government should also manage the rest of their money?
Finally, whether we get Social Security or not, doesn't it really come down to the fact that we are responsible for our own retirement. As many of the comments pointed out, Social Security is not expected to provide a retirement; rather, it is a supplement. Since that is quite true, at least in practicality, would greater efforts at financial education, both within the schools and by the individuals not be desirable?
Next week -- freedom of religion. Just kidding. I'll be back to talking about issues more directly related to investing and trading. Thanks for all your comments concerning Social Security.
by Bill Kraft, Editor
Copyright 2008, Makin' Hay, Inc.
All Rights Reserved
P.S. Save $50 PER MONTH on my subscription trading newsletters!
SAVE on my Under $10 Stock Trader Service!
SAVE on my Option Trader Service!
SAVE on my Trend Trader Service!
Technorati tags: stock trading stock market investing trend trading swing trading option trading stock options stock option trading Bill Kraft
To comment on Bill's article click on the "comments" link below.