Let Us Invest

Published June 29th, 2008

 
Florida’s property tax and insurance problems are major.
 
But those problems pale in the face of this nation’s most pressing domestic problem: Social Security.
 
Of course, the problem with Social Security in the first place is that it’s a fraud. Let’s break it down:

·   We are forced to pay a significant portion of our income --- about 12 percent for the average middle class taxpayer --- for the stated purpose of taking care of ourselves when we retire.
 
·   Nothing is invested on our behalf, and since this plan earns no money for us, any benefits that one person gets in excess of his or her investment comes at the expense of others.

·   We are, instead, given a promissory note that when current taxpayers (that’s us folks) get old, the income of future taxpayers will pay those retirement benefits.
 
A further look at the truth finds Social Security subject to the mercy of every political wind to come along; as well, the government can change (and has done so 18 times since 1935) the amount of money is confiscates to fund the SS promissory note.

Nonetheless - Baby Boomers are about to begin a major draw down on that which was promised to them --- and the cow is looking mighty thin.
 
As Congress looks at this issue, the slightest of edges can be given to any plan that permits some personal investment of Social Security taxes --- although 4 percent of the 6 percent collected is too much.
 
In fact, an overall reasonable plan would be to fund, say half the SS funding gap with benefit reductions --- and future benefits would be tied to what could be afforded by the current payroll tax. The other half of the gap could be funded with additional revenue through a graduated rise in the payroll tax cap.
 
But none of this should even be considered without also ensuring there’s at least a 1.5 to 2.5 percent mandatory additional employee contribution that would go into a personal retirement account -- managed by that individual and his or her advisors.