After reading your column, purportedly about Social Security, I felt compelled to add to the debate using facts and simple common sense, two tools completely absent from your piece.

First, Social Security is not a retirement fund, it is a pay-as-you-go social program, as welfare is. There is NO Social Security Trust Fund, just a pile of government IOU's to itself, to be paid with taxes collected at the time of redemption. Our contributions to Social Security are not saved, they are spent immediately on SS benefits, and any money left over is spent on other government programs. Social Security contributions earn NO interest, paying interest on loans to yourself is meaningless.

Next, Social Security is not going broke, it is already broke. If tax collections stop today, retirement checks stop today. Every year, expenditures climb faster than tax collections. In about 5 years, expenditures will equal collections, meaning the government will no longer have the $50 billion in annual surpluses it currently spends on other things, and will have to start paying for an increasing amount of retirement benefits out of income tax revenues. The "crisis" year of 2042 that some talk about is simply when the government runs out of the IOUs it has written itself, again a meaningless accounting device. By that time, the annual shortfall will be in hundreds of billions of dollars.

Now we can always raise taxes, and/or cut benefits, but for how long will tomorrow's workers agree to pay more and get less? Today's average worker will contribute about $125,000 (remember the half that comes from the employer is actually coming out of your pocket) and, upon retirement, receive almost that in benefits. If the government had instead required that worker to invest that money in a Personal Retirement Account, that worker would have had at least three to four times that amount upon retirement (even in very conservative investments).

The choice is very simple, between a plan that offers a negative return, increasing taxes and the risk of future benefit cuts and a plan that offers a solid return, ownership of your benefits, and a tax burden that will actually decrease in the future. There will be some hardship, as the government must learn to do without $100 billion annually in order to start building the private accounts, but within 30 to 40 years these accounts will produce enough to match Social Security's promised benefits, allowing for reduction of payroll taxes or increasing the amount to private accounts. If this had been done with the Social Security surpluses over the last few decades, we would already be there, but better late than never.

Lower income workers will benefit the most. Payroll taxes are regressive, and increases to keep the current system solvent will only make them more regressive. Lower wage workers find it difficult to save for their retirement, especially after Social Security takes 10 percent. Even if only 2 percent of a worker's average earnings of $30,000 a year are put into their Personal Retirement Account, it will likely be able to equal the value of Social Security's promised benefits at retirement. In addition to increased benefits at retirement, Personal Retirement Accounts are also an asset that can be passed on to future generations.

Allowing a portion of Social Security taxes to be invested in Personal Retirement Accounts is quite simply the best and only way to permanently "fix" our current Social Security system. It is beyond me how anyone can be afraid of allowing people to save for their retirement. Federal employees already have the option of personal retirement accounts, and they are finding that their system is greatly superior to Social Security. A good analogy might be to compare Personal Retirement Accounts to buying a house. It costs a little more, especially at first, but your net worth grows as your house's value increases. You have something of worth to leave your children, and you have the security of knowing there is no landlord to jack up your rent or leave you in a lurch.

Brett Malin


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