Wednesday, October 28, 2009

On Retirement: Wherein Militant Ginger takes another lurch towards Libertarianism

I got a letter from the Federal Government yesterday.

It was a statement about the balance of my Social Security account - the national insurance program to which every worker in America contributes through their payroll taxes. Fairly routine stuff...

...except this time around, the Social Security administration also included a response to right-wing fear-mongers who'd been warning that Social Security would be bankrupt within three decades (a date which would, incidentally, be about when I'd first be likely to make use of Social Security.)

Social Security boldly countered this claim with two bits of information - and remember, these statements come from the Federal Government, not 'liar, liar, pants-on-fire' conservative propagandists:
  • Okay, you caught us! Based on current projections, payroll taxes will fail to cover Social Security's payment commitments as early as 2037 - "unless something is done." (That 'something' is implied to be a hike in payroll taxes.)
  • But don't worry! Because even based on current projections: "You will still receive $760 in social Security payments for every $1,000 invested."
Wait, so let me get this straight - for every $1,000 dollars I've 'invested' in my Social Security retirement fund throughout my life, I will only get 75% of it back? What kind of crappy 'investment' is that?

I wouldn't really mind - especially since private retirement funds are currently getting equally nobbled by the economy (losing an average of 31% of their value, prompting Time Magazine to argue 'Why it's time to retire the 401(k)')

Yet the difference between a crappy retirement investment and Social Security is that you don't have a choice about investing in Social Security. Whether you like it or not, you're getting a percentage taken out every time you get paid.

Back in March of 2008, I argued that Social Security was doomed - and am disgraced to admit that I later went back on that position, after getting swept up in defending the government from all that 'socialist' nonsense the right-wing were spouting.

But I should have stuck to my guns!
It turns out I was right all along.

At least now I know better - and am back to my original position. In an ideal America, we should be allowed to 'opt out' of Social Security and invest our retirement funds how we best see fit.

[Given the current economy, that's bundled into wads of cash and stuffed into your mattress - Editorial Bear]

Except we can't, in good conscience. Because we have an obligation.

Irresponsible governments (both Republican and Democrat) have dipped into our Social Security principle over the past decades, which has left the coffers empty. Today, a whole generation of workers watch their Social Security payments not being invested for their own retirement, but instead being used to cash the last generations' Social Security cheques.

And there's nothing wrong with that, because the last generation deserve their cheques. It's just that it's a vicious circle - and if we're offered the opportunity to 'opt out' of Social Security, yesterday's retirees (who rely on today's payroll taxes) will stop getting their cheques altogether!

And when my generation retires, the problem gets worse. It deepens the black hole - because there will be even more retirees around - and fewer workers left to sustain them!

And that means we've unforgivably screwed our children's pooch. We've left our kids with the financial commitment of supporting our own retirement - and yet they'll have nothing to show for it at the end.

I don't want to start parroting the right-wing rhetoric about 'socialism,' but in this instance, it kind of is. It's also the worst kind of socialism - one that's utterly divorced from the principles of social justice; an inexcusable 'flat tax' on American workers that's redistributed blindly.

So we can't 'opt out.' Nor can our kids. Not now, not ever. Because those retirees deserve their Social Security cheques - and so will we. So what is the solution to fix Social Security?

Higher payroll taxes. More commitment.

And that means my son, and his entire generation, will be left paying more, but getting less. For every dollar they invest in Social Security, a percentage of it is already committed to somebody else. If I think my 76% return on my investment is shameful, wait until we see their figures.

And even if that unfair system works - and Social Security does manage to claw its way back into the black - how long will it be before some other 'bold' government decides to 'borrow' from the replenished fund again - and set this whole cycle back into motion?

1 comment:

Susanne said...

Great post although sad! :-(

I think our beloved leaders in government ARE allowed to opt out of Social Security. Nice perk for them. They don't actually have to live like the common folks.

I've been "upset" about this SS stuff for years. I feel for the future generations having to pay for all these debts we are presently accruing. It's like going into more debt is in style these days. *sigh*