Social.....Security?

Today's news tells us that we are due for another report on the state of the federal Social Security program. This will inevitably result in another round of hand-wringing, name-calling, and total inaction. Nothing will happen until and unless we begin to take an interest in what is going on. Unfortunately, many of us won't do that until we find out that we won't be getting Social Security checks any more.

Here's the debate. Do we continue under the system that we have which is a fixed income (deteremined by Congress) based on how much we contribute to the system, or do we switch to a system that is much like the 401K plan offered by most employers today? Many opt for the "security" of having the federal government continue to maintain a tax-based system. The problem is that it is going broke because there are more of us retiring than are joining the workforce. So we are either going to have to start producing a lot more workers, or we are going to have to raise our payroll taxes and take less home.

The other option, is the "privatized" system in which the federal government, much like your employer, takes your money from your paycheck and invests it in whatever investment portfolio you have chosen. The advantage here is multi-fold. First, you are determining the amount of risk that you are willing to take and you can change this risk level as you get closer to retirement. Second, you are investing your money. You are not sending your dollars into a pool in Washington, maybe to never be seen again. Your account would be your property. Third, you have the potential to make more through your investments than you would in the current Social Security program. Fourth, the federal government stops having the incentive to increase payroll taxes to fund a bankrupt system.

To get answers to many questions and issues concerning this debate, you can check the Cato Institutes' website. It has a variety of papers and op-ed pieces devoted to the issue of privitization.

As one who is beginning to think about what Social Security has in store for me, I can't urge you enough to get involved. Contact your legislators. At the very least, if you don't want to change the plan for yourself, at least let them make it available to me. I'd sign up tomorrow!!

Thoughts anyone?