Monday, February 07, 2005

Social Security reform: Maybe my children will win this lottery


Let's regain control over the lottery!

Does the current Social Security system amount to little more than a
gamble? President Bush thinks so, and in a way he’s right.

In his State of the Union address, the President made a robust push for social
security reform, challenging the nation to "do what Americans have always
done, and build a better world for our children and grandchildren."

This statement seems to be in response to one of the most frustrating aspects of the Social Security system: You can pay into Social Security all of your life, but there’s no guarantee that you’ll be able to get anything out of it. In other words, you lose the lottery if you die before you’re eligible to collect Social Security.

The President’s proposed private personal accounts could help even the score. More than 45 million Americans currently rely on Social Security income, and millions more are expected to become eligible for benefits in this decade.

This massive payout reduces funds available for the domestic agenda, including money to reduce crime, protect our vanishing ecosystem, and educate our children.

Shouldn't we do all we can to avert higher taxes, massive borrowing, and severe cuts to our Social Security benefits? There's bipartisan support to restrain the government's spending appetite. Our children's prosperity will require reduction of deficits.

Under the President’s plan, workers may set aside part of their money for their own personal retirement account. The money would then go into a mix of conservative bonds and stock funds.

The plan appeals to me on two counts. First, if I die early, my heirs and charity choices get the money. Plus, I’m stimulating the economy by pumping capital into the private sector for business growth and job creation. I want to be part of the solution to secure the future.

I’ve known many people who died shortly after retirement. After paying thousands into the Social Security system, the only benefit their heirs or designated charities received was a survivor benefit check of about $200. They lost that lottery.

Social Security reform is and should be a bipartisan issue. In a 1999 speech, President Clinton proposed putting a portion of Social Security funds into the private sector, "where it will have a greater rate of return." Although the details may differ, it seems he and the current President are on the same page here. Great!

Under the President's proposal, only the younger generation would have an opportunity to create private accounts. I'm gonna bet they choose to put their allowable 3% into a private account. Surely our bright young adults could do better than the government's 1.3% rate of return.

Now the big question is: Can President Bush protect our future while promising to cut the federal budget? Can he, for example, reduce deficits without ignoring environmental and energy requirement issues?

SolutionGal thinks this lame duck President has a great opportunity to transform Social Security from the third rail of American politics into the great institution it was meant to be. Over the coming months, let’s keep an eye on Mr. Bush to see if he cashes in on this chance and, in doing so, helps ensure that our children’s future is no gamble. In the mean time, we can all work on securing our own future.


Manage your finances:
Social Security Online
Social Security Advisory Service
Go Direct – direct deposit for Social Security

Start or expand your business:
Small Business Association
CCH Business Owner’s Toolkit

What websites have helped you manage your money?

What website have you great insights on personal financial security?

Please share a personal empowering experience that helped you to earn more money.

A society in which there is widespread economic insecurity can turn freedom into a barren and vapid right for millions of people. Eleanor Roosevelt, 27 September 1948