Among my random thoughts last weekend I mentioned Social Security
and was not surprised to receive a couple of comments on the subject. I
guess I was surprised that I didn't get more comments. All of us are in
one category or another -- we are either receiving the 'benefits' or we
are paying for them. The simple fact is that Social Security clearly
seems to be a failing program if not an already failed program. I guess
my question to you is whether it is a program that should simply be
abandoned or do you see a cure? As with so many things administered by
the government there is a great cost simply in terms of paying for the
bureaucracy that was created to maintain and administer the program.
Those costs aside, investments have been somewhat less than sterling and
it seems that some politicians all too often have attempted to divert or
"borrow" from the funds. It has been no secret that Social Security
will be out of money in the not too distant future. Back in the '80's,
at least according to his diary, President Reagan recognized the
approaching problem and was urging Congress to work to repair the
situation. Now today, more than a quarter of a century later, little
has been done other than raise tax payments and defer full eligibility
for entitlement to benefits. Take in more, pay out less has seemed to
be the solution so far. You are probably aware of at least parts of the
approaches favored by the current presidential candidates, but if you
aren't, there is a pretty comprehensive article on the front page of the
Investor's Business Daily on May 27, 2008.
According to the IBD article, Senator Obama says that letting
people invest a portion of their Social Security taxes is a way to
"gamble away people's retirement on Wall Street." I disagree. After
all, it is the people's money in the first place, isn't it? While some
might inevitably invest badly, do they not still have the right to
invest their own money as they choose or must they invest as the
government says? It is the people who permitted the government to take
their money in the first place to "invest" it for their social
security. What kind of a job has the government done? I agree that our
population in general is not well-educated regarding investments and
investing, but I think it is high time that money management, risk
awareness, debt control, and investment instruction become part of our
public education (and private education) curriculum. Had that been done
back in the '80s, those students would now have a much better foundation
and be more competent to prepare for their own retirement. Is it time
to start that now? I definitely believe it is. Otherwise, do we just
keep raising taxes and/or lowering benefits until the taxpayer finally
revolts or the benefits become completely meaningless? What do you
think? Do you have any solutions?
While you are certainly at liberty to criticize my thoughts, I
would suggest it might be more productive, if you disagree with me, to
offer your own positive solutions. Criticism of the proposals of
others in government has been the standard political fare for decades
with no positive solutions offered and, quite obviously, that has
solved absolutely nothing. I believe solutions rather than rhetoric are
more necessary now than ever.
A wise subscriber last week questioned what would happen to the
employers' contribution to Social Security if people were permitted to
invest some of their social security money on their own. How about
placing that money directly into an individual retirement account for
each employee that is invested in interest bearing government bonds?
That portion of an individual's retirement would then be reasonably safe
and there would be an assurance that it would grow through interest
payments. The employee's portion of the tax could be invested in a
regulated employee account and, just like the current Social Security,
the funds would not be available until a pre-determined retirement age.
I believe this is an important subject and I'd like to see your
thoughts on the subject. I don't pretend to have the answers, I only
have some thoughts like those I expressed above. The real point, I
think, is that we better get a real dialog going in this country and
find a solution or at least a direction other than simply continuing to
feed a very hungry bureaucracy.
For those interested in a coaching session, I only have 3 left for
the remainder of the year. Check the link if you are interested.
You can comment on this article on my blog!
Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
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