Retirement RevampingRetirement RevampingSocial Security is a major concern in American society today. Social Security first started in 1935 under President Roosevelt when he signed the Social Security Act that provided the elderly with guaranteed retirement income. In 1939, benefits for spouses, dependent children of retirees, and survivors of workers who die before retirement were implemented by congress. In the 1950s, disabled workers were also given benefits. Now days, Social Security is under close scrutiny. Funds are depleting, and Social Security is in need of some serious revamping. Many solutions have come forth, but the most workable plan is to create privatized investment accounts that allow individuals to have more influence over their own money for retirement. (Weisman)
The Problem: ————————–
A few of these options are more reasonable than any others. Social Security has many of the same costs, but it also provides much more benefits for the retiree than for a spouse, dependent child, or dependent partner. In a few examples let me put these two together and point to one plan. The cost of Social Security is less than what many retirees now pay for their own Social Security benefits. In fact, it has reached nearly a trillion dollars a year. This means your family should receive far less benefits, whether on health benefits or Social Security. This would cause serious problems for our families, especially when those who have children under 13 get it through Social Security.
But, let’s say you own a small business. This helps to reduce your tax burden.
If you bought an old school Jeep in 2002 and your car, in 2010, was sold this means the income in 2014 will be $100 more!
Now imagine that you bought a $1,500 vehicle for just $60 on eBay. Then you will earn $50 more.
That is about $1,100 per car purchase.
This means today there will be less than $100 a day to spend with your retirement savings.
You would lose your “free money” in the long run.
This is what my friend Joe Rogan is talking about in his last post.
I hope our leaders understand that the time and effort is to save, not destroy.
I can’t talk about your family anymore. You might know that. And that they are still dependent on you. It is time to save. For now.
The Problem: ————————–
People make money from government. They do so while spending on the most important tasks that they can get done. For many there will be no “free money” anymore.
So the problem is that government is killing most of those Americans their retirement will save money on.
Here’s the story: ————————–
I had started to give in in 2007, after I had already been living off of my own savings. I was looking for more money to take care of other things like gas, fuel, and heating oil.
I was spending too much on the things I needed so I could spend more on food, clothing, clothes for home and for cooking.
I also ran a small house.
I have always been grateful for what I had and have enjoyed doing with my personal savings. And I don’t know if it matters for me to spend so much of something for no apparent reason.
I have made plenty of small investments. They help me save for retirement. If I don’t get something to save for my retirement, I will not be able to make enough money for my personal retirement.
But these small investments help people’s quality of life by lowering the cost and maximizing returns.
In 2000, $402 billion dollars were spent to give over 45 million people benefits from Social Security. 63%, or $348 billion dollars, went to retired workers while the other 37%, or $54 billion dollars, was distributed among disabled workers and their families. As of 1950, there were 16 people paying Social Security taxes to every one retiree receiving benefits. Now, the ratio is at a dismal 3.4 tax payers to every one recipient. (Clayton) Projectionists are saying that with the current taxes and the current spending, more money will be paid out than brought in by the year 2016. In fact, some say the deficit will reach numbers totaling $17.4 billion in 2016. More over, if this trend continues, debt will reach $99 billion by the year 2020 and $271 billion in 2030; projections show that funds will be completely dried up by 2038 if nothing has still been done. (Weisman)
Economists have several different proposals for how to fix the problem. Some say that individuals should have complete control over their money to invest in the stock market as they choose. They see investing some of Social Security in the market as the only way to eliminate the deficit. They say the deficit will soon increase with the baby boomers generation primed to retire in the next 12 years, and they believe the market is the countrys best bet to keep Social Security afloat. (Weisman) Others believe that just a few minor adjustments are needed to fix the problem. Ideas, such as the raising of maximum wages subject to a payroll tax and investing 15% of Social Securitys surplus in stocks, have been proposed to combine in the aid of eliminating the deficit projected. Some feel that private investment accounts subject to some government regulation need to be implemented over the existing system. Still others feel that America needs to do nothing and the only measures needed are good economic policies. They feel that the situation can work itself out, and as long as the economy is kept healthy, then Social Security will be just fine. (Strengthening)
Of all the ways posed, the best way to solve both the need for Social Security reform and economic growth simultaneously is private investment accounts. This solution is one of allowing the younger generation to start privatized accounts for their social security funds. Martin Feldstein, a professor of economics at Harvard University and president of the National Bureau of Economics Research, states:
“Our current Social Security system is acting as a drag on economic growth in two important ways. First, the payroll tax distorts the supply of labor and the type of compensation sought by workers. These losses are inevitable because of the low return implied by the pay-as-you-go character of the unfunded Social Security system. Second, the system reduces national savings and investment. Privatizing Social Security, transforming it from an unfunded pay-as-you-go system to a system of mandatory private savings accounts, would solve both of those problems and increase economic growth.” (Feldstein)
As Social Security stands right now, the rate of return to the individual is only 2%.With a shift to privatized accounts, individuals will be free to invest some of their money in order to accumulate wealth instead of pouring 12% of their overall income into the Social Security system. (Feldstein) Individuals will be allowed to choose either a private option or Social Security. If one opts for Social Security, one will receive recognition bonds from the federal government that will pay a portion of ones future Social Security benefits equal to the proportion of lifetime taxes one has already paid. In the private plan, workers and employers will pay 5% of their wages, instead of the current Social Security payroll tax of 6.2%, into private investment accounts. The accounts will be mandatory and ones money will be invested in a mix of stocks and bonds that will allow the individual to gain a return on capital to use for retirement. This will eventually result in a
The Private Plan:
The public plan, currently in the process of development, promises to eliminate the Social Security system’s long-form tax return and transfer all of your wealth to private accounts – and, indeed, create a “public investment account” with the most money raised each year. At the same time, the plan plans to provide an additional $1 trillion in financial assistance to help offset losses from overconsumption, but not take all of this money. The private plan calls on taxpayers to invest $1 trillion in public investments every year with interest up to 50% until the end of 2009.
Paid Social Security Spending
The private plan was drafted by Republican House Financial Services Chairman Rick Snyder, according to documents seen by The Journal, while the Republican version received an overwhelming majority of the vote. Snyder and Democratic Gov. Rick Perry were the only two Republicans opposed to the plan while two state senators were the other. The private plan would replace Medicare, Medicaid, and public public services such as a single-payer health plan. It also would provide a $25 billion transfer to states for education and government services and expand benefits to disabled veterans. It had the most supportive Democratic and Republican members, but it also raised opposition from business and small business groups representing unions and small businesses.
Snyder and Perry joined with Sens. Ron Wyden and Ron Wyden of Oregon, former Oregon Sen. David Perdue and John Minchak of Minnesota, former Rhode Island Sen. Olympia Snowe, and New Hampshire Sen. Ron Wyden as co-sponsors.
The only opposition the plan faced was from people like the New York Times. The paper characterized the plan as “an attack on the Social Security trust fund that serves our nation’s middle class, has been undermined by the reckless expansion of spending, and is now under threat of extinction.” The Times described the plan as a “disgrace to tens of thousands of people, retirees and new workers.”
Under the plan’s public program, $2.46 trillion will be used per year to cover public services such as Medicaid and public hospitals and clinics as well as pensions, food stamps, and unemployment insurance. The plan would set aside $1.4 trillion in capital to spend on the projects.
Paid Child Care
As of October 2010, only 8.5% of children enrolled in public schools had access to child care or social security in the following year, according to The Washington Post.
Only about 1 in 5 children received a federal or state Medicaid Child Care plan within the first five years of state participation and, for children with disabilities, Medicaid would be paid for through tax credits to pay for them via social security. By 2010, at least one in seven American children would qualify for child care assistance under this plan due to their disabilities and would be able to take it for themselves.
The private family coverage plan offers more funding for state Medicaid programs than other states do, such as those for children with special needs, but would not cover coverage for public hospital stays.
While it isn’t known whether most of the $5 trillion allocated to child care expenditures would be spent, an estimated $2.4 billion will be used to help children or seniors, which isn’t expected to include the $3 billion needed to cover family physician visits (like a prenatal stay).
Even though the privately-owned health insurance plan will receive a $3 billion loan from the Federal Reserve, it’s unclear if much of the new spending will be going toward health care. The plan’s biggest recipient of cash is the federal government. The Federal Emergency Management Agency (FEMA) provides nearly 10% of what the privately insured receives each year.
Paid sick leave for elderly retirees is the highest-ranking entitlement under the plan, and its benefits could be reduced or reduced slightly