Another voice about Social Security reform
One problem with current Social Security issues is that we, as citizens, are not given enough factual information. We do hear commentary on TV – mostly simplistic, even deceptive. Now we are being hit with a multi-million dollar propaganda campaign to “sell” a scheme for scaling back the system. So it is encouraging to find more and more factual material that can help us learn and judge matters for ourselves.
For instance, whenever you hear that the system is “in crisis,” you can bet it’s just another scare tactic. By reading up on the matter, you will realize that for the foreseeable future there is no crisis. (P. Diamond, M.I.T.) We’re already hearing the drum beat that privatization – individual investment accounts – is the only way to avoid insolvency. As the new mantra goes, “it’s your money; you should be able to do with it as you wish.” Not so. Payroll taxes are not “ours” – they provide the benefits for retirees. Anything we might invest reduces those funds. Administrative estimates project that such reductions would total two trillion dollars – to be added, of course, to trillions of debt now on the federal books.
There are other, more effective, ways to maintain the system. Tweaking the system periodically by small adjustments in retirement age, benefits, payroll taxes, and the taxable income cap, either separately or in combination, are a few of the solutions being suggested. With private investing, however, analysts estimate in 60 years workers’ benefits will be half of what they are now. Unfortunately, the president, through his Commission to Strengthen Social Security, actually mandated privatization, thereby indicating his unwillingness to consider alternative plans. (D. Altman, N.Y. Times)
More financial experts agree that private investment accounts are the worst solution of all. (B. Schwartz, N.Y. Times) They will undermine the fundamental purpose of Social Security: a guaranteed minimum income to protect the elderly against indigence. It is an insurance system, not a pension plan. Privatization guarantees nothing.
Visualize your own situation if your take home pay were increased by, say, two thousand dollars. If you’re wise, you’d invest it. That’s called “playing the market.” Me? I’d head for Vegas. That’s called “playing the slots.” Either way, the results would be the same. The market gains or loses. Sometimes the cherries do line up. Makes you think, doesn’t it? Good. That’s what you should do, instead of sitting around and being bamboozled by another government shell game. To paraphrase a familiar saying, “If it ain’t broke, don’t smash it.”
Consider the investment process itself. Will you have time, while holding down a full time job, to study and acquire enough knowledge and skill to invest wisely? What investments would you acquire? Do you know the costs of investing? Where will you invest? (Remember Enron?) Who would you trust for advice? Could you afford to pay someone to invest for you? If you did everything right, and the market is high when you retire, no doubt you will be comfortable. If the market happens to drop, well, uh, gee, what a shame. That’s why my pappy told me, “Never invest more than you can afford to lose.” Good advice. Now ask yourself, how much of your retirement saving are you willing to lose? One more point to ponder: “Most people who picked stocks on their own did not do a good job.” (S. Benartzi, Univ. of Chicago)
It’s not necessarily pessimistic to think letters in newspapers do not accomplish much beyond allowing folks to blow off steam. After all, we don’t get to vote on issues, even those as important as Social Security. Our representatives in Washington do that. So, the next step, after familiarizing yourself with factual information, is to write your representatives, letting them know how you think and feel – and to tell them how you’d like them to vote. That’s their job. Remember, Social Security is not a partisan issue – it is your issue. Tell everyone you know to write. It’s all we can do. That’s how our democracy works. We’re spending billions of dollars every day to protect it, so use it. Please, all of us must make this effort if we expect to maintain a proven system of protection against the poverty and misery that once prevailed in old age.
Charles Jaschob lives in Penn Valley
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