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Monday, January 02, 2006

Social Security

As people mature they are entitled to change their minds about issues, and I have recently found occasion to change my mind on a big one.

For most of my life I have seen social security as anything but secure, and as an unneeded tax burden that had to be phased out. Now I’m not so sure.

As I have studied the issue more deeply I find that social security is more akin to a form of government retirement fund than a forced charity. The concept is you pay in for most of your life, and then draw out for your golden years. While this still makes only a little sense to me at this time I do see the benefit for those who genuinely need it.

Let’s face it, most Americans are too busy trying to make ends meet and still have some recreation on the side to fund a retirement on their own. This is especially true of the lower income brackets. The simple fact is that an unsettling number of Americans would never use the money they pay into social security to build a retirement fund. O do away with social security would be to place the people who need it most in a situation where they will spend their declining years wholly destitute. This is the very thing that social security was designed to prevent.

So the question then becomes; how do we shore up social security to guarantee it will still be there when my generation needs it? How about when my grandchildren need it? And what about their grandchildren? See, when making long term plans it is important to think of the consequences of our action beyond our own immediate needs.

I don’t have all the answers right now. One day I hope to, and if I don’t then I need to find somebody who can fill in the missing pieces of the puzzle. But I do have one suggestion. To my knowledge everybody gets social security once they reach the appropriate age regardless of personal wealth. It might help out to cut the social security benefits off entirely for those who have amassed enough wealth do without it comfortably. Hypothetically speaking, in today’s dollars that would be say . . . one million dollars net worth, not counting one personal residence. This number is probably actually a bit low, but the beauty comes in when that person’s net worth drops below the set mark then social security will kick in.

Obviously there will be abuses of a system that is set up this way, but I would probably be right to say that those abuses would only come from people who are near the mark. People with significantly more than the maximum worth would be crazy to forfeit an entire fortune just to get a check from the government every month.

I don’t know what the maximum net worth of a person should be before social security gets cut off, but I know there is one that is fair and workable. The mystery in this piece of the plan is just how much that is.

I’m no economist. I just have a basic working knowledge of economics, enough to keep from being bamboozled by any but the most skilled con-men. But that’s okay. A man in authority is supposed to surround himself with experts in every pertinent field, including economics. That’s exactly what I intend to do should I ever pull off the most unlikely stunt of all time by becoming President of the United States of America.

I will look deeper into the issue of social security as the years go on, and I hope to find more workable solutions to shore up social security for generations to come without it becoming too great a burden to bear. If it ever does become too much for the American people then the government would be forced to cut it or drive our nation into generalized poverty. We can not allow this to happen. We must find a solution, and we must find it before it becomes a crisis.

20 Comments:

  • I was always taught that you don't depend on our Government for anything. I am 53 and have more money than I will ever need. I was taught at a very young age the importance of money and how to make it work for you and I did. I took chances that most people wouldn't even think of.

    My Social Security will be given to charity, all of it.

    Anyone can be rich, anyone. If you work 6 days a week and invest the money that you make on the 6th day, after a few years you will be rich. The problem is that most Americans don't want to work 6 days a week, I did.

    Teach your children and grandchildren the importance of money and how to make it work for you. Teach them this starting in pre-school, schools aren't going to teach it and without saying it's the most important think a child can learn, how to handle money.

    The next thing you should teach a child is that they are to never, ever work for someone else. Leaving paycheck to paycheck, what a horrible way to live and what a waste.

    Also, always remember, there is no gain without risk.

    When your laying on your death-bed, You won't be sorry for what you did, you'll be sorry for what you didn't do.

    Back to Social Security, I planned not using Social Security or any Government money ever, when I was in High School.

    By Blogger Ranando, at 11:17 AM  

  • i'm glad you brought this up, daniel! and i never considered the fact that a lot of people wouldn't invest their ss, but you're right, some wouldn't...just as you're right, this will take a bunch of smart economic people to figure this out!!

    By Blogger Libby, at 1:14 PM  

  • Well... I actually did like the President's plan, though I admit it wasn't too smart politically to push it right away, and then be soft on everything else for the next several months. But I don't know, really. Maybe we'll be lucky, and the welfare state will have diminished enough so that it'll be a moot point by the time I'm retirement age.

    By Blogger Rebekah, at 1:53 PM  

  • Unfortunately too many Americans are like me financially. Economic embicliles. Social Security is the only meager hope for my future and many others.

    By Blogger Theway2k, at 5:17 PM  

  • Regardless of political philosophy, Social Security is a popular program, and is here to stay.

    The health of Social Security is what is at issue. My generation, the Baby Boomers begin eligiblity in 2011. The numbers of people in the system will become overwhelming.

    Social Security was a program intended to supplement retirement, not be retirement. Today with fewer workers to support the system as a percentage of the retirees in the system, and with people living so much longer today, this is the cause of projected shortfalls in about 10 years.

    Government was also supposed to leave Social Security in a separate fund from general revenues. The Dems changed that under LBJ.

    It is now important to begin the real fixing of the system. Pres Bush was courageous in attempting a fix. No one has been as bold in the past.

    A choice between private or public accounts may be the solution. Gov't would, however, have to learn to live without the Soc Sec dollars in the General Revenue fund.

    By Blogger Rick's Corner, at 7:12 PM  

  • Daniel, unfortunatly your understand of Social Security is lacking. To call it a "government retirement fund" is a bald faced lie. Social Security is money taken from people today and given to people today. There is no savings as a retirement fund has. There is no social security savings, there is no social security investments, there is no social security oversight. Any excess money is instantly spent in pork projects by congress. Period. There is nothing about the program that is remotely like a retirement fund.

    Now on to the other backwards comments so far. Social Security is NOT a popular program. In fact it could very easily be phased out in a matter of 10 years. First by taking away incentive on future growth. If someone is 50 today working to that magic 65 retirement age, then they find out they aren't going to get any more benefits than what they put in today, you know damn well they would start saving. Second would be converting the SS money into a forced retirement program. It doesnt have to be anything complicated just an investment into a tangible savings account of some form. It could be a basic savings account, it could be a IRA or a 401k or a money market account, but an account set aside marked for retirement.

    Once the ball got rolling this could easily be implemented within 10 years and social "security" could be eliminated.

    By Blogger Haximus, at 7:42 PM  

  • Of course one of the big problems is the average life expectancy. When Social Security was dreamed up in the thirties a man had an expected life of 56 years, nine years before he would be eligable to draw from it. Now with a life expectancy of 74 years, to be equitable to the original plan you should have to be 83 to start drawing from Social Security. Of course try to shove that through as a law and you would have a revolution.

    By Blogger Fish, at 8:01 PM  

  • The solution is put it in the stock market.

    My retirement plan grew 8 percent last year alone in a diversified privately managed retirement plan.

    Get the gov't out of SS. Put the money where it works for you, not the money grubbing politicians who raid it.

    Al

    http://tinyurl.com/9nge5

    By Anonymous Al Czervic, at 5:52 AM  

  • Dan'l, I think I'm probably in agreement with you again.

    Scary, huh?

    Like you, economics is not my forte. I'll add that I'm not especially up on SS, but as I understand it, SS makes sense to me in a way that investment does not.

    Further, there are some of us who don't believe in investing as it is normally defined for moral or philosphical reasons.

    Myself, I plan on working 'til I drop and not retiring. But I certainly don't want to see a bunch of elderly folk dying in the streets and SS seems a reasonable answer.

    Ronando said:
    "Anyone can be rich, anyone. If you work 6 days a week and invest the money..."

    Sounds like a horrible way to be rich to me. I thank God for the labor unions who worked to help us get down to a 5 day work week.

    We need time to spend with our families and communities or our so-called wealth means nothing, seems to me.

    By Blogger Dan Trabue, at 9:36 AM  

  • Daniel,
    Right on, brother! The biggest problem I see with your proposal, however, is that it will inflame the same folks who feel the inheritance tax is unfair. From my point of view, the entire economic environment in the United States helps to make some people very wealthy; they couldn't achieve that wealth without the infrastructure to promote good economic growth. So I see no problem with the wealthy kicking back a little into the system that helped make them rich.

    I also agree that SS was never intended to be the sole retirement fund for folks. However, the golden age of businesses taking care of their labor force is long gone. Businesses are providing fewer and fewer tangible retirment benefits, pensions are nearly unheard of anymore and the numbers benefitting from military pensions is plummeting dramatically with the advent of the all-volunteer military. Intentions aside, SS has become the sole source of retirement funds for many and our elected officials are going to be forced to deal within that paradigm. I give Bush a small bit of credit for tackling the issue, though of course I don't agree with how he proposed to handle it.

    haximus - SS is paid out in proportion to payments in, barring cases of early disability. The SS surplus is not just dumped into the general fund, it's borrowed by the Treasury. U.S. Treasury securities are issued to secure the debt. And, trust me, even your President doesn't really believe that U.S. Treasuries are "worthless paper", else he should give Yale back that MBA.

    By Blogger Samurai Sam, at 10:23 AM  

  • Dan,

    I spend everyday all day with my family. This morning my wife and I walked with our dogs about 4 miles along the beach here in Malibu. In about an hour we're leaving for our home in Maui, again as a family. In the past 15 years I have never not been able to get up walk about 20 steps and give my wife a hug, so really I have no idea what your talking about.

    Who says you have to make a choice between working and family.

    Also, yesterday I wrote a check to Social Security for over $ 18,000.00 and I never want a penny back. Yes, I'm still a California Corporation and I still pay into Social Security.

    By Blogger Ranando, at 10:31 AM  

  • OK, I apologize ranando for what I assumed you were suggesting. Still, I don't know that most people can work out whatever arrangement you have to work six days a week at home, having time with their families and investing enough to be as wealthy as you're suggesting.

    As it is, many lower income folk are already working more than 40 hours a week just to make ends meet.

    By Blogger Dan Trabue, at 11:41 AM  

  • So ranando, what do you mean then, there is no gain without risk?

    By Blogger Dan Trabue, at 11:43 AM  

  • Dan,

    If you get up right now and walk out of your job and tell yourself that you are going to put as much energy into yourself as you do youe employer, you will be just fine, gauranteed.

    Most people aren't willing to take the risk and that's a shame.

    No excuses, it's that simple.

    By Blogger Ranando, at 12:35 PM  

  • Okay let me rephrase that: I don't believe in "investing" or at least investing in The Market. Is that what you mean by no gain/no risk?

    Mind you, I'm not interested in being wealthy, at all. I'm just curious as to what you see as a way to be free of the gov't.

    By Blogger Dan Trabue, at 12:52 PM  

  • Dan,

    I'm not talking about investing money or stocks. I'm talking investing in yourself.

    By Blogger Ranando, at 1:07 PM  

  • Investment and saving is a good thing. Want to be less dependent on others, get yourself educated in matters of money. Part of the problem in this country is the wanting of material things without learning economics, and the value of saving.

    Social Security was put in place to supplement retirement when life expectancy was less than age 65. If a person lives to 65 today, they can on average expect to live past 80.

    I work in the financial industry as an insurance agent. Social Security is popular. Most people are lazy and do not want to learn on their own how money works. Let someone else, the employer and/or gov't do it for me it's too complicated. Social Security is easy. Forget the lousey return.

    The class envy promoted by the left is BS. I know just as many libs as conservatives with $$. Everyone wants to be rich, but they don't want to do what it takes to get there. Envy won't get a person there, and neither will the socialist philosophy.

    Things are not so complicated. Hard work, self-education, learning how to make money work, and discipline is all it takes. Few will become Bill Gates, but who cares.

    As to unions, they were a positive at one time, now they are an albatross to economic growth, and often controlled by the mob.

    The expression that 'money is the root of evil,' is actually incorrect. The real quote is that the 'love of money is the root of evil.'

    By Blogger Rick's Corner, at 5:43 PM  

  • After re-reading Renando, we are much in agreement. I don't necessarily believe you have to work 6 days, or give up family time, but just having a job and being a clock watcher won't do. Renando says much of what the motivators such as Brian Tracey say.

    By Blogger Rick's Corner, at 5:48 PM  

  • "Everyone wants to be rich"

    Not me, unless you're talking about rich in friends and love and reasonably so in health, all of which is mostly within my control.

    My friends and I are all largely trying to be downwardly mobile, thanks just the same.

    By Blogger Dan Trabue, at 6:26 PM  

  • samuri sam-

    "haximus - SS is paid out in proportion to payments in, barring cases of early disability. The SS surplus is not just dumped into the general fund, it's borrowed by the Treasury. U.S. Treasury securities are issued to secure the debt. And, trust me, even your President doesn't really believe that U.S. Treasuries are "worthless paper", else he should give Yale back that MBA."

    Thats a lie and you know it. SS is divided out as it was taken in. Someone who contributed the max amount to it will get the max (current) amount back. Someone who contributed a very tiny amount will get similar back and someone who contributed nothing will get nothing (barring immigration and alike).

    Then you try to lie your way out of it saying that it's "borrowed" money. Bull, if it was "borrowed" it would have been payed back. Try to get a loan of 10% of your income EVERY YEAR from your bank without paying anything on the previous years loans. They wont give you one, period. It is worthless paper when the "loan" bannot be payed back. The federal government does not have the balls to cut spending or raise taxes so they cant pay their "debt" to SS. Lets break this out into a simple math problem for you. Timmy has 10 dollars, he spends his 10 dollars on candy then puts 10 dollars of gas in his car paid from his credit card. How much money does Timmy have? Now take that amount and figure out how Timmy will pay his credit card.

    By Blogger Haximus, at 5:13 PM  

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