Social Security

Social Security is a retirement trust fund that was set up in 1935 by dedicated payroll taxes. It was, however, not set up to become the sole income for retirement. It basically was a system to supplement one’s income when they did retire, and designed to help ease the burden of those elderly who would leave the work force. Unfortunately, this is where the problem lies, because many retirees expected this income to be their only source.

Full retirement benefits depended upon on a retiree’s year of birth, and were determined by a certain age, initially age 65.

The Social Security Administration at the time did not contemplate that people in this generation were going to live a lot longer. They had set up the system to support a percentage of the people who paid into the system; however, because people are living longer that percentage exceeds the required needs.

People did not realize that changes in the Social Security System took place when Congress changed the funding from a trust fund and put it into part of the federal budget. By using this excess amount of funds, Congress was able to spend this money and in turn, put I.O.U.s into this once trusted ‘trust fund’. The savings became less and less because of inflation when the wages did not rise as quickly as the costs.

As everyone is well aware, this Social Security System is not working. There simply is not enough money to cover the cost of all the seniors retiring, and since people are living longer, the funds needed are required for a much longer period.

There are fewer younger people paying into the system, and this has caused a direct shortage of funds. When these younger people become seniors, there will not be any funds left, and they will have paid into a system that will not and cannot meet its obligations.

To strengthen the Social Security, U.S. citizens need first to understand how the system works, or better yet, to understand how it does not work.

The government is the worst investment for handling Social Security because it does not offer the potential for growth; it can only invest in government bonds, and those, other than the small interest paid, do not increase in value.

In order to help rescue the system in place and to keep faith to those who have paid into it for years, Social Security must find a way to pay these benefits. One way would be to tally each individual investment, then add an average interest and pay out the amount obligated.

Individuals would then be responsible for their own future. Private agencies and investment managers should be set up to work with individual trust accounts, where each person can decide on whom they wish to invest their funds. If they find one private agency that does not appear to work for them, they can move on to another. These funds, however, cannot be withdrawn until the person has retired.

By allowing people to become involved with their own funds and management of those funds, there would now be a system set up that would work and benefit all retirees. More people would become conscientious about their investments and would find ways to increase the value of the funds, making people far richer than what the government could ever do.

The major incentive to strengthen Society Security would be to delete it and open up new areas for people to take control of their own lives.