Social Security Issues
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There is a lot of debate on the issues of Social Security today. The Social Security system is the largest government program of income distribution in the United States. “Social Securitys dire financial problems are now being acknowledged by even the most diehard supporters of the system. According to the latest report of the Social Security systems Board of Trustees, Social Security will be insolvent by the year 2029, down from 2030 in last years report.”(1)
Many people dont understand how the Social Security system really works. There are no separate Social Security “accounts” set up for each taxpayer to which he contributes his Social Security “tax” each year. Many people believe these accounts exist, that the money they pay into their accounts grows each year until retirement, and when they retire they get back what they paid in with interest. This is not true. Most people are
unaware of the fact that our current Social Security system is a “pay-as-you-go” program, which means that the revenue the federal government raises each tax year for Social Security benefits is paid out that same year to beneficiaries.
I think if people were able or allowed to stop paying the small percentage of their pay checks into social security but was required to pay that small percentage into some sort of investment account; the economy would definitely not be where it is today. Not only would putting the money into a retirement fund help secure everyones financial future if they invested properly, but about 99% of all investment type accounts have some sort of tax write off every year. This not only puts more money into your pocket, but it gives you more money to invest if you are smart with your money. If the program were to change and people are smart about what investments to make and use this plan effectively, they can work full time at their jobs, while working part time at their fortune.
On the other hand, allowing the government to invest the Social Security trust fund in private capital markets “would amount to the “socialization” of at least a large portion of the U.S. economy. It would put ownership rights over much of the American economy in the hands of the U.S. government. “(2) This would be a terrible idea in my opinion because the amount they could invest would be a very large amount.
“During the early years of Social Security there were as many as 42 workers paying into the system for every retiree. But as the country has aged, that ratio has declined. Today about three workers pay into the system for every retiree in Social Security,”(3) this tells me that the program is outdated and need to just go away if we cant fix it very quickly. I think people should be responsible for their own money and see what happens then.
1. 1996 Annual Report of