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Greg on Politics(8): Social Security |
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Gregory Morris, 5/29/07 10:03:35 am |
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Here is another issue that got a little press a while back, but now seems to be largely ignored by the media, and more importantly the presidential candidates.
When I am old enough to retire, I better have enough money saved up to live on until I die, because I know I can't rely on Social Security. The system we have set up now requires that I pay for my parents' generation, and my children will pay for mine. The problem is, people are living longer and the size of each generation increases, so before long we are going to have more retired people than social-security-payers. The biggest problem with the current system is that social security money doesn't grow. What we put in is all that can come out. That means if the demand on social security ever increases, the input will have to increase as well. Since it is clear that the demand is increasing, where will the extra money come from? Why not manage it in a way that makes financial sense, and more importantly, works? First, if I am paying for social security, it damn-well better be there for me when I need it. Second, if I die before I use the amount I paid into it, how is that fair to me (or my children)? For these reasons, I am a huge fan of having individual retirement accounts, where my money is my money.
Even a complete moron (or terrible 401k/IRA manager) can get a 6% annual return. In addition, instead of all of this money passing from my pocket into someone else's, it will be invested in private industry! Imagine the implications of having such a major cash infusion, not only in domestic industry, but international as well? People who are against high taxes argue that if you have more money, you'll spend more money, and that will help the economy. I agree. However, putting the vast amount of social-security money back into our economy will undoubtedly cause growth and innovation as well. In addition, it will also increase the amount of money in my pocket when I hit 65 (or 60, or 70, or whatever the retirement age is when I get there.) Congress isn't too worried about this right now, because it doesn't affect congressmen or the majority of their voting constituents. But we should fix it before the system crashes, and we have to raise taxes again just to hang on.
I don't think that the government should have a hand in my retirement savings. There are two reasons our current social security system is in place today. Number one is: it was put there as a safety net for people who need it. This, while this is a noble goal, it hurts the country just as much as it helps (causing financial reliance on the government, taking money out of consumers' pockets, etc.) The second reason is: the people don't trust themselves to save up for retirement, and therefore put the power to do so in the hands of the government. This, in and of itself is utter stupidity, but I think I've run that discussion into the ground in previous posts (and will run it further down in the future.) I believe in personal responsibility, even over a long period of time. Unfortunately, the American span of attention seems to get shorter every second, while the desire for instant gratification grows exponentially.
So what I propose is A) make social security optional and B) invest social security money in the private industry. First, if I am capable of managing my own investments (or paying someone else to do it), then I should be allowed to do so. Second, for Americans who do not trust themselves to invest wisely (or at all), let them pay into social security as it stands now. Those who pay into it can draw from it later. Those who don't, can't. But that money should also be invested, so that it can grow to meet the increased demand.
There are still some holes in my proposal, and I acknowledge that.
How will the government handle investing money? My guess would be that they could contract it out to private companies. It is a tricky problem, but I'm sure there are some big financial corporations out there who could manage it.
What kind of transition would there be between the systems? I would suggest that if you want to quit the social security program at any time, you should be allowed to. We can't refund your money paid to date, because current recipients rely on it. But you should be allowed to make the decision to start privately investing the money you normally pay into SS. But once you quit, you are out for good. Basically, you are choosing to either trust yourself, or trust the government.
Won't some people just stop paying into SS and not invest on their own? Yes. Screw 'em. Personal responsibility.
Yes, but I mean, won't they become a burden on society? Yeah, probably. But by the time that happens, we will already be so prosperous due to my ingenious planning, that we'll be able to afford big rockets to send these losers out into space.
That isn't funny. Well, I said there are still problems with this, but it is a heck of a lot better than what we are facing now.
Note: this is not meant to be scholarly work. This is simply my opinion. If I use someone else's ideas, I try to credit them where appropriate. I also reserve the right to change my opinion when provided with better information, as any half-intelligent person should do. |
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