Wednesday, March 26, 2008

Social Security revisited

The Social Security Trustees have warned once again that the program is in dire straights. They project in 2041 that social security will exhaust its trust fund and will be solely dependent on payroll taxes to pay benefits. In that year they project that the US Treasury will have redeemed every last penny plus interest that was loaned.

In 2002 I attempted to raise the awareness of the problem and for the most part did that. I have been speaking to people since that time. It is a slow process that takes time. In the past month I have spoken personally to over 150 different people. Some of these have gone on to speak with others. I am finding that those in the early 50’s are very supportive of my proposal to repeal the social security act.

Is it finally sinking in? The Social Security Administration for ten years now has been sending yearly statements to those over age 25. These statements paint a dismal future for Social Security. In just 23 short years or sooner, the trust fund will be gone. Every penny paid in by boomers, generation x and y will have been for what? There are only two ways to solve this problem; raise taxes on workers or cut benefits.

Will you be sliced when it's time to cut off Social Security?
If you think American workers will always accept higher taxes to support Social Security, you are mistaken. At some point in time, taxes will hit a level from which they will rise no further.

We could be at that point now.

In this case, the only alternative is to cut benefits. As a worker, is it better for you to delay the fix, continuing to pay a high tax for low benefits, or would it be better to "take the money and run"?

A person can choose to support Social Security, knowing it is a loss from the start, or they can support repealing Social Security, allowing them the opportunity to save 10.6 percent of wages.

Saving 10.6 percent of wages in the very same investment as Social Security yields a benefit that is three times larger than Social Security can pay. To put it another way, you would have to lose 70 percent of your portfolio balance at retirement to reduce you to the level of a Social Security benefit.

You are playing hot potato with Social Security. Will it be your birth year for which those who are asked to pay your Social Security benefits say no?

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NBC-33 Debate poll results from 2002