In 1935, The Social Security Act became law in the United States. With the creation of this government run retirement program, the American people began to see the role of government in a different manner than previous generations.
Prior to the creation of Social Security, the nation’s people were by and large independent, rugged and individualistic in nature. The birth of Social Security brought about a paradigm shift in our nation’s political, cultural and financial priorities.
The American public accepted the Social Security concept without much question. After all, they were living through the Great Depression in 1935. The government had to take a greater role in the people’s lives, right?
In 1935, the average American worker lived to be only 62 years of age. Providing retirement benefits to Americans 65 years of age, a full three years after the average American passed away, was no problem at all.
Today, the average American worker lives to be age 80. If we followed the Franklin Roosevelt (FDR) model of Social Security, Americans would receive Social Security benefits at age 83. Can you imagine what American seniors would say, if you told them they had to wait until age 83 to receive their Social Security benefits? Yet, this would be in keeping with FDR’s policies.
Think about this for a second. The average American lives longer than ever before. Yet, there are fewer younger workers to pay into the Social Security system (just one consequence of 44 million abortions since Roe V Wade). This is a perpetual problem that will continue to compound and magnify.
In 1950, 16 employed Americans paid the Social Security benefits of 1 retired American. In 2008, just three years from now, only 2 employed Americans will pay the Social Security benefits of 1 retired American. By 2018, more retired Americans will receive benefits than can be paid for by younger workers.
We face an exploding deficit like nothing we have ever seen in American history. Our federal government must pay for a growing number of seniors’ retirement benefits. This is accomplished by taking more and more money from younger workers. In return, the younger workers receive little to no Social Security benefits when they retire.
Under our current Social Security system, we must loan our retirement benefits to the federal government. In turn, the federal government pays for the benefits of elderly Americans, while promising younger workers nothing but government IOU’s.
In 1993, President Bill Clinton pushed through Congress (a Democrat controlled Congress I might add), a bill that raised taxes on Social Security benefits by 70%. That’s right, the Democrats in Congress raised taxes by 70% on American seniors receiving Social Security benefits. Yet, the problem of Social Security was not solved.
Today, eight out of every ten Americans pay more in payroll taxes (Social Security and Medicare combined) than in income tax. Yet, with all this manipulating of federal tax revenue, the Social Security system is still going to be in deficit by 2018.
So how do we repair the Social Security system? How do we pay American seniors what they were promised while still providing younger Americans an equitable system of retirement? There is only one solution to this problem. Individual ownership, not loanership, will smooth out the retirement fiasco.
In the early 1980’s, both Great Britain and Chile embraced an ownership system of retirement for their people. The results in both nations are overwhelming. In Chile, the average rate of return for a retiring worker’s investment is 13%. That’s 13 times the rate of return of our current Social Security system.
In Britain, the numbers are similar, with retired Britons earning more than they ever dreamed of with the old government run system. Even Russia, the former Soviet Union, has embraced a private retirement system that has the Russians poised for ownership of a much larger return of retirement benefits.
President Bush wants to create an ownership retirement system. One where Americans ages 54 and younger are able to take one-third of their Social Security taxes and have it invested in a private fund. The remaining two-thirds of our Social Security taxes will pay for the benefits of seniors who retire under the current system.
This is a win-win situation. Those Americans aged 55 and older will receive the benefits they were promised. Those of us aged 54 and under will make up the inevitable loss of Social Security benefits through private investing - investing that yields a much higher rate of return.
Knowing that the current Social Security system is going to crash in thirteen years, we must act now. Otherwise, all Americans will be forced to pay for huge deficits, simply because we were too afraid to act now.
It is high time we own our retirement. Loaning our tax money to the federal government for the purposes of saving and investing has proven to be nothing more than an elaborate Pyramid Scheme.
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