卧看春秋负平生
2005-02-06, 11:57 PM
By: David J. Willmott, Sr., Editor and Publisher January 19, 2005
I was about 13 years old when I first started working on the books. When I got my first paycheck, much to my surprise, it was less than the total amount I thought I had earned. I discussed this with my dad and he explained to me that the employer had to take out money for taxes and Social Security and the employer matched the amount I was paying into Social Security. He said when I reached 65 years of age the government would send me a check each month to supplement my retirement funds. It didn't sound like a bad deal until I did the calculations.
If I banked my share and my employer's contribution to Social Security and let it compound over the next 50 years, I would have a huge sum of money available for my retirement. As I remember it, if I just left the principal intact, earning interest, the interest on the investment almost equaled what the government was promising to pay me at the time.
I asked my father if there was any way I could get out of it and he told me no, the government had mandated that all wage earners set aside part of their income for the future. I argued with him that it was not fair, that I could make out better on my own than what the government could do for me. In so many words my father told me: Tough luck, welcome to the working world.
Advertisement
During my 50-some odd years of working I have repeatedly heard that when we are ready to retire there will not be sufficient funds in the Social Security fund for the government to live up to its obligations. Most people much younger than me are totally convinced that this is true.
It takes five workers to fund one beneficiary. In America today there are just over two workers for each beneficiary. Americans have been encouraged or forced by economics to have smaller families. Combined taxes take about 53 cents out of every dollar we earn. Most families cannot get along with one wage earner, so one- or two-children families are now the norm. This means there will be fewer American children going into the work force in future years.
President George W. Bush has taken the bold step of recognizing the pitfalls for future Social Security recipients in his proposal to reform Social Security. If Bush's plan is passed, individuals will be able to take a small portion of their Social Security benefits and invest it in limited investment vehicles such as bond funds or conservative investment trusts. They will have the opportunity of deciding what is best for themselves and their money. Those who choose to go this route would continue to receive Social Security benefits upon their retirement, but they would receive less than the people who stayed solely in the government-sponsored Social Security fund.
On the surface, we like this concept, but as always, the devil is in the details. The Democrats immediately came out fourscore opposed to allowing individuals to do for themselves what government has failed to do.
Democrats generally believe that government can do better for an individual than the individual can do for himself. We don't subscribe to this theory. We have more faith in individual human beings than we have in our collective governments.
If proper precautions are set up on the investment vehicles, which would prevent individuals from raiding these dedicated retirement accounts, there will be no harm.
Under the current system, funds collected by the Social Security administration, are lent to the United States government and spent as part of the general fund. The government issues IOU's to the Social Security Administration but they do not pay interest on the monies borrowed. Past funds collected for Social Security should have been deposited in a "lock box" that the politicians could not get their hands on. These monies should have been invested in low- risk accounts and allowed to at least earn rates equivalent to the United States Treasury 30 year bonds. They weren't, and today our Social Security system is in jeopardy.
The system cries out for reform. We will be watching Bush's proposal carefully. If the proposal is as sound as we think it will be, all Americans should support these changes which could save our children's retirement. To do nothing and allow the government to borrow Social Security funds without interest is a sure prescription for collapse.
And why not?
I was about 13 years old when I first started working on the books. When I got my first paycheck, much to my surprise, it was less than the total amount I thought I had earned. I discussed this with my dad and he explained to me that the employer had to take out money for taxes and Social Security and the employer matched the amount I was paying into Social Security. He said when I reached 65 years of age the government would send me a check each month to supplement my retirement funds. It didn't sound like a bad deal until I did the calculations.
If I banked my share and my employer's contribution to Social Security and let it compound over the next 50 years, I would have a huge sum of money available for my retirement. As I remember it, if I just left the principal intact, earning interest, the interest on the investment almost equaled what the government was promising to pay me at the time.
I asked my father if there was any way I could get out of it and he told me no, the government had mandated that all wage earners set aside part of their income for the future. I argued with him that it was not fair, that I could make out better on my own than what the government could do for me. In so many words my father told me: Tough luck, welcome to the working world.
Advertisement
During my 50-some odd years of working I have repeatedly heard that when we are ready to retire there will not be sufficient funds in the Social Security fund for the government to live up to its obligations. Most people much younger than me are totally convinced that this is true.
It takes five workers to fund one beneficiary. In America today there are just over two workers for each beneficiary. Americans have been encouraged or forced by economics to have smaller families. Combined taxes take about 53 cents out of every dollar we earn. Most families cannot get along with one wage earner, so one- or two-children families are now the norm. This means there will be fewer American children going into the work force in future years.
President George W. Bush has taken the bold step of recognizing the pitfalls for future Social Security recipients in his proposal to reform Social Security. If Bush's plan is passed, individuals will be able to take a small portion of their Social Security benefits and invest it in limited investment vehicles such as bond funds or conservative investment trusts. They will have the opportunity of deciding what is best for themselves and their money. Those who choose to go this route would continue to receive Social Security benefits upon their retirement, but they would receive less than the people who stayed solely in the government-sponsored Social Security fund.
On the surface, we like this concept, but as always, the devil is in the details. The Democrats immediately came out fourscore opposed to allowing individuals to do for themselves what government has failed to do.
Democrats generally believe that government can do better for an individual than the individual can do for himself. We don't subscribe to this theory. We have more faith in individual human beings than we have in our collective governments.
If proper precautions are set up on the investment vehicles, which would prevent individuals from raiding these dedicated retirement accounts, there will be no harm.
Under the current system, funds collected by the Social Security administration, are lent to the United States government and spent as part of the general fund. The government issues IOU's to the Social Security Administration but they do not pay interest on the monies borrowed. Past funds collected for Social Security should have been deposited in a "lock box" that the politicians could not get their hands on. These monies should have been invested in low- risk accounts and allowed to at least earn rates equivalent to the United States Treasury 30 year bonds. They weren't, and today our Social Security system is in jeopardy.
The system cries out for reform. We will be watching Bush's proposal carefully. If the proposal is as sound as we think it will be, all Americans should support these changes which could save our children's retirement. To do nothing and allow the government to borrow Social Security funds without interest is a sure prescription for collapse.
And why not?