I know you don’t give a damn about Social Security. I know now that I’ve mentioned Social Security you’re probably not going to finish reading this article. But you should do both, and I’m going to tell you why.
First, you should read this article because you don’t want to be the only one of your friends not talking about it. Now wouldn’t that be awkward?Second, you should give a damn about Social Security because if you’re reading the Emerald you’re probably either in school or still working, which means it’s you — not the old folks — who will be affected by changes to the system.
We can no longer take retirement for granted in this country. There is now a better-than-ever chance you could both begin and end your working life wearing a blue vest or asking, “Do you want fries with that?” Have you ever wondered why the majority of people who work in low-level service jobs seem to be either really young or really old?
Let’s cut through the politics, the nuances and the numbers for just a second and get to Social Security
Crisis 101.
The problem is not, as some have suggested, that Social Security is going to run out of cash and be unable to pay promised benefits. The problem is that Social Security’s expenses are going to exceed its revenues, which will force the government to go deeper and deeper into deficit in order to continue paying for the
program that is already the single biggest line item in the $3 trillion
federal budget.
Social Security will be Ross Perot’s worst nightmare 10 times over because it will make all previous deficit spending seem Scrooge-like in frugality. It will test the absolute limit — and beyond — of how our economy can continue to function while our government is mortgaging everything just to make ends meet. Congress will finally be functioning like an average American household, and it will pray for a return to the days when its checks weren’t allowed to bounce.
Though we’ve known about these problems for decades, we’ve done nothing about it. No, the crisis is not yet imminent. But that’s why it’s
crucial that we act now, while we
still can. We don’t need to live in
fear. We do need to think smart and act smart today.
We need to either cut benefits, raise taxes or both. The president is against raising taxes and slowing the unsustainably high rate of benefit growth for high income workers. The
Democrats do not have their own plan; they’re just against the
president’s plan.
The most controversial part of the president’s plan to reform Social Security is the concept of voluntary private accounts. This would involve taking a tiny fraction of the money paid into Social Security and setting it aside in a private account that the
individual would control.
The idea is that a person can either have traditional Social Security and collect a monthly check, or a
person can take a small portion and try to get a higher rate of return through mutual funds.
Although many may be nervous about the president’s idea for the future of Social Security, these private accounts are not as risky as they may sound. First, the amount of money invested is quite small. Second, investing in mutual funds carries much less risk than investing directly in stocks (which is one reason why the potential rewards are smaller).
Moreover, one investment option in the president’s plan is a fund composed entirely of treasury bonds, which are universally regarded as the safest investment on the face of the planet. None of this, by the way, stops a monthly deposit from being made into a retiree’s bank account (they stopped using checks a while ago). Nothing really changes except retirees will own a portion of the assets used to pay their monthly sums.
The real key, though, is to avoid the Social Security quagmire altogether. Many people are afraid of investing, which is not very different from gambling in their minds. But I’ve got news: The only true escape from the imminent Social Security mess is to become an investor.
Those who get smart about their finances and start putting money into individual retirement accounts, real estate, and other investments won’t need to worry about whether the government is able to keep its promises into old age. More importantly, they won’t have to worry about putting on the blue vest and going back to work in their twilight years.

[email protected]