Social InSecurity

I wish I could call this a new debate. However, since it’s conception, Social Security has been in the forefronts of every person’s mind. People wonder, will my check be there when I retire? A question that for the past 69 years has been answered a resounding yes! But as the saying goes, all good things must come to an end. And so Social Security is preparing itself for retirement.

At its formation, Social Security worked because there were more workers paying in, then retirees being paid out. This had to do with a couple of simple factors. (1) Populations were steady so that there were more working age people in proportion to those not working. (2) Life expectancy of 61 was much closer to retirement age of 65.



Populations are very different then they were then. In 1935, Social Security had 37 workers paying in for only one retiree. Today, from most estimates, only two workers pay in for one retiree. The Social Security office has done a remarkable job in saving extra income so that they would be prepared for this, but at this rate, it is hard to imagine those savings will continue to hold out. With the upcoming generation of Baby Boomers preparing to retire, the fold will swell to almost uncontrollable widths, while the much smaller Generation X will have to carry the load.

Life expectancy in 1935 was 61, four years less then the selected retirement age of 65. Even the most optimistic thinkers can see that the government hoped that you died before you reached retirement. It was the only way to insure that money will be collected, yet not dispersed completely. Yet today, life expectancy is 77, over 10 years higher than retirement age that is now at 67. What a change. Not only are less people paying in proportional to those receiving benefits, but now there are more people alive to actually receive benefits.

President Bush has announced that he fully supports private accounts alongside Social Security, and is being met with a wall of resistance from the Democratic Party and especially the new minority leader Harry Reid. He told Tim Russert on Meet The Press that the privatization of social security only will be benefiting the fat cats on Wall Street. Mr. Reid, what do you propose? In the same interview Harry told Russert that Social Security benefits will continue to be paid out in entirety until 2055, and will receive 80% after that. Mr. Reid, are you telling America, that only receiving 80% of the money the government took out of you paycheck for so many years will suffice? It really sounds like in your words, “[Republican have] been trying to destroy Social Security for a long time and now they think they have an opening to do it.” But if we leave it alone, and let that sleeping dog lie, that it may not wake up.

What I believe is much more progressive than what the President proposes. I do think that privatization is the right way to go. Even with such catastrophic events in the past four years, the market has continued to produce returns over a ten year period. The ebb and flow of the market has been positive for a long time. The controls that the FED enacted after the stock market crash of 1929 have held strong. There is no reason to have confidence that they will continue to perform at a high rate. In fact a majority of Americans, near 64%, already trust Wall Street with retirement accounts in the forms of IRAs, 401ks, and countless others. America is already on board with privatization, it is time the government joins too. But I think another step needs to be taken. Retirement benefits should be tied to life expectancies. With better health care, more Americans are living longer lives. It is unfathomable to continue to pay premiums to people who are going to outspend the money they paid in. That is fiscally irresponsible.

The truth about Social Security is that it was a great program. The issue is that we now have a chance to actually try and fix a potential problem years before it completely fall into dispair. I think that we as a country of thoughtful, responsible people should take the opportunity we have now and start the process of overhauling, what Harry Reid calls the “old age pension” program. My whole life I have heard, the Baby Boomers will be the first generation to leave the following generation worse off than themselves. I don’t know if that is true, but I see before them the great door of opportunity to actually leave an indelible mark upon our future for the good. Let’s just hope that the price of admission through that door, as well as those seeking to keep it closed don’t stand in the way.