AARP, the largest senior lobby group in the world with 35 million members, is ready to confront politicians with every weapon in their arsenal in order to keep our Social Security system from being cannibalized by Wall Street profiteers. George W. Bushs plan for a partial privatization of Social Security is the centerpiece in his bid to promote an ownership society in America.
I have to admit to being initially intrigued with the idea of investing some of the social security withholding that I fork over to Uncle Sam with every paycheck. Why not allow participants in the system to invest some of the money? After all, Social Security withholding is our hard-earned cash, right?
But wait a minute. As was outlined by an opinion piece in the Northern Express
Weekly issue of 1/20/05, Social Security should be considered an insurance account, not a retirement fund. 70 years ago our country committed itself to institutionalizing a system that would guarantee monthly income for senior citizens. Social Security was never intended to be a retirement plan that an American citizen could rely upon to live comfortably. It was meant to be a survival package.
When politicians focus on Social Security as the big crises in our economy, they are simply wrong. The system has periodically needed adjustments over the years and might need another one soon. The real question is: do we want a safety net for our retired citizens or dont we?
7.65% of our earnings (up to $90,000 of wages for 2005) is a small price to pay to ensure that our elderly are guaranteed some monthly income and medical care benefits. Besides, who do you think pays for older people who are left with nothing? We taxpayers always end up with the bill, anyway.
Do you really trust a bunch of rich politicians, who regard future social security benefits to be laughable compared to the rest of their investment portfolios, to decide this issue? Whether they are Republicans or Democrats, they dont have a clue how critical Social Security is to the little guy. As a result, AARP should be very suspicious when millionaires tell us they have the ultimate solution for senior citizens. Especially when that solution is to take money out of the system.
Social Security is not even the big problem funding issues can and will be resolved. Retirement planning, or lack thereof, is the immediate crisis we should be focused on. Admit it chances are you havent given much thought to retirement savings. Most of us are just struggling to stay alive day-to-day, right?
Well, join the group. Americans cant or refuse to save money and it is stifling our economy and the retirement prospects of our citizens. Europeans save 20% of their gross domestic product, Japan 25%, and China a whopping 50% of GDP. By contract, the average household in the U.S. saves .8% (not 8%) of their household income. .8 of 1% equates to $240 annually saved for every wage earner of $30,000. As a result, we have become a nation that only knows the mindset of borrow and spend.
What we really need is for politicians to take the restrictions off actual retirement accounts. Beginning in 2005, only $4000 can generally be put into individual retirement accounts (IRAs) on a tax-free basis. Whoop-de-do, that is $333 per month maximum. With the lack of savings and retirement accounts being such a huge problem in this country, why not allow $10,000 annually? Better yet, if we instituted unlimited tax-free contributions, the amount of consumer savings would grow exponentially.
Before we gut Social Security, lets listen to what the seniors have to say. They know there is no reason why we cant retain our Social Security safety net and do more to encourage Americans to save for their own retirement.