Nature of the Problem Social Security is not a problem right now; in fact, it
runs a large surplus every year. However, Americans are living longer, and
drawing more Social Security payments than they ever put in. Early in the next
century, we will be paying out more than we take in, and Social Security will
have to dip into its surplus, which is currently used by the federal government
for other spending. When the last of the baby boomers retire, the payroll tax
would have to almost double to maintain benefits. This creates an undue burden
on Generation X-ers, and solutions need to be found to prevent this from
happening. II. The Solution * Citizens should be given a choice on whether or
not they wish to invest their own Social Security funds in a high-yield bank
account, or the stock market. Right now, the average American has withdrawn all
he has put into Social Security within 7 years of retirement. This forces the
everyday worker to support those currently on Social Security with his payments.
Whoever is still in the work force should be given the opportunity to do with
their money as they see fit. If someone feels that they are unable to invest
wisely in the stock market, there are other options available. For instance, and
perhaps the simplest, is to invest the funds into a money-market account, which
will on average receive 1-1 1/2% more interest than a traditional savings
account. From the time the average American starts working - say 16 or 17 - till
the time he retires, there will be a lot of money that has accumulated in this
account. Another option is a tax-sheltered annuity. This is an option available
to anyone - as long as they have an investment broker - to take a certain amount
of money from their paycheck, tax free, and have it invested and re-in! vested
in stocks and bonds. It can be cashed out at any times. Many banks offer
tax-sheltered annuities for a moderate commission. The last, and most risky
option, is to invest the funds in the stock market. This is done preferably for
national security reasons. For instance, if the government bought stock in mass
quantities, a bull market could be created, and the market could crash, and the
government could potentially lose billions of dollars. However, every American
is not going to invest in the stock market, and those who do are not going to
buy the massive quantities of stock that the federal government would. This
would provide a lot more safety for those investing, and if the market did
crash, citizens could not sue the federal government for the loss of their
money. * Retirement age should be raised to 70. When Franklin D. Roosevelt
created Social Security amidst the Great Depression, the average American could
only expect to live to the age of 60. The retirement age was set at 65. So on
the average, most people never would live to collect their Social Security.
Today, the average American can expect to live to the age of 76. That is a huge
life expectancy change, and Social Security policy should be changed to reflect
it. By setting the retirement age at 76, we are giving our average senior
citizen 6 years to enjoy his retirement, while policy makers of the past gave
him -5 years. This should take effect by the fifth fiscal year after its passage
in Congress. * Adjust the CPI by -1.1% Right now, the CPI (Consumer Price
Index), which is used to measure the level of inflation, overestimates inflation
by 1.1 percentage points. Since the CPI dictates how much Social Security
payments must increase throughout the year due to inflation, any over-estimation
would cost the government billions of dollars. By reducing the CPI by 1.1%, the
federal government would save $1 trillion over 12 years. * Means-Test Social
Security Social Security is an entitlement program, which means that government
funds are automatically provided to people that meet certain criteria. Social
Security is an entitlement program in that anyone over the age of 65 qualifies,
regardless of their income. 40% of retired persons depend on Social Security as
their only means of income. However, people like Ross Perot, and Bill Gates, and
other multi-millionaires, are eligible for social security. What means-testing
refers to is that if someone did not need Social Security, they would not be
eligible to get it. Those who can support themselves through retirement at
$50,000 a year should not be eligible for it.