Social Security: Let’s Call It Like It Is

                A government report came out yesterday stating that social security reserves, which pay for retirement and disability benefits, will run dry by 2033. When the year 2033 comes to a close, I will have paid my fair share of taxes to this fund through income taxes, but will only be forty-five years old. I will have to wait another seventeen years before I can start collecting early benefits and another four years after that before I will be able to collect full benefits. My future is looking very bleak.

                Social Security needs reform. With the baby boomer generation nearing retirement age the benefits will quickly run out. There are not enough employed young people out there to cover all these costs of retirement since the post-grad generation is fighting to secure jobs and pay off their student loans. The Wall Street Journal this morning reported that, in 2011, social security benefits paid out $596.2 billion to 44.8 million Americans. Right now the ratio of tax payer to beneficiary is 2.8 to 1, down from 3.3 to 1 in 2007. The baby boomers have hit their retirement age and the able bodies are struggling to cover the cost. According to the Social Security Administration’s current projections, the annual cost of social security benefits expressed as a share of workers’ taxable earnings will grow from 11.3 percent in 2007, the last pre-recession year, to roughly 17.4 percent in 2035. We are running out of people who can afford to pay into this archaically organized program and, hence, need a transition.

                One way to reform this program is an idea proposed by George W. Bush in 2005: privatization. Even though this legislation did not pass the Republican Congress back in 2005, it is an idea that needs to be reconsidered. Although politicians may find this a scary act to propose in an election year due to the fact that the older generation is one of the strongest majorities at the voting booths, action needs to be discussed now before it’s too late. My solution is to grandfather in a new privatized social security system. If we taxed for benefits and put the individual’s money into a social security investment portfolio, then we kill two birds with one stone. We invest tax dollars back into the economy to stimulate growth and the individual saves and grows their investment for their desired retirement package. A criticism of this would surely be the volatility of the markets; however, it’s better than being taxed my personal income that will be put into a fund that I may never see.

                I have been a proponent of this type of reform since I was a freshman in college. Investing in my future makes sense to me. If we work hard, then we should enjoy the nice retirement package that we earned. With money left over we can help those less fortunate; but, how are we going to help anyone if we run out of money to do so? Economic prosperity and sound financial planning is the way ensure America’s future.