Two years ago, it was unthinkable that Democrats would allow Social Security to be part of any spending cuts.
Today, as the deficit spirals out of control — according to some calculations, when taking into consideration our entire public debt at the federal, state and local levels, including unfunded entitlements and pensions our true debt picture exceeds $130 trillion — there is a crack in the veneer among Democrats who once considered Social Security sacrosanct.
Even they recognize with more than $100 trillion in debt attributed to entitlements, something has to give to bring debt levels down.
According to the latest government figures, Social Security disbursed $706 billion in fiscal year 2010, which accounted for 20 percent of the government’s entire budget. Social Security currently has 54 million beneficiaries, which includes retirees and those with disabilities.
The financial foundation upon which Social Security was built relied on the premise there would always be more people paying in than taking out. Not only are we living longer but now that the baby-boomer generation is reaching retirement age, the number of new beneficiaries is going to soar. There simply isn’t enough money in the Treasury to sustain this.
It is somewhat encouraging that both parties are finally looking at some options. However, before assuming that everyone is on the same page, top Democrats want to move the retirement age to 69 or 70 by 2075. Is there anyone that believes Social Security will even exist in 64 years?
Most people in Congress will be dead by then, along with today’s baby boomers. We’re facing $100 trillion in entitlement debt and the best we can do is to address it in 64 years?
If you want to see a glimpse into the future of Social Security entitlements, look no further than the Social Security Disability Insurance program. It is projected to run out of cash within seven years, propelled by beneficiaries that climbed to 10.2 million in 2010 from 6.6 million in 2002.
Adding to this level of frustration, there are some people on Capitol Hill that claim that Social Security can be fully funded through 2037 due to tax surpluses. After that, beneficiaries will still be able to draw at least 75 percent of their benefits.
I can’t imagine anyone working today who is counting on having that money available based on our current level of spending. The younger members of today’s workforce must recognize the Social Security taxes taken from their paycheck’s are for today’s retirees and that they will never reap the benefits they paid into the fund.
A solution being floated around Congress is to allow today’s workers to self-fund their own retirement program. Instead of expecting the government to pay retirement benefits, they will be able to fund their own retirements without drawing on the U.S. Treasury.
The Census Bureau pegs the median U.S. income at slightly over $25,000 per year. Today, 6.2 percent of each paycheck is taken out for Social Security. That accounts for about $1,559 per year, or slightly more than $100 per month.
According to some calculations I’ve come across, if that money were deposited into a Roth IRA from age 21 until age 65 with an 8 percent return, a retired worker would have $601,000 in retirement savings — that’s more than three times the average Social Security benefit, and it's tax-free. Even a 5 percent rate of return would result in a nest egg of a quarter-million dollars.
I am fully prepared to work longer and get less. I don’t want to be a burden to our younger generation. Our government needs to be candid with us. I would rather know today we have a plan in place so I can plan for my future.
Where is this kind of bold thinking in Washington? It’s time to rethink Social Security if we are to take control of our debt. We don’t need draconian cuts that will rile retirees and the left.
We simply need visionary politicians with fresh thinking to look for ways to reduce the size of the government by giving more financial responsibility to the average citizen. It must be a priority today – not in 64 years.
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