Solution to Retirement Crisis: Fix Social Security
Before you start to think I have gone off of the deep end, I am not suggesting that social security is the answer to retirement dreams. I am the last person who wants to see government involvement in retirement. It does play an important role in most people's retirement planning. Plus, we spent a lifetime paying for it through our payroll taxes and should get something for that expense/investment.
The social security stats are telling:
"Data from the Social Security Administration shows that more than three out of five aged beneficiaries depend on the program for at least half of their monthly income, with about a third leaning on it for virtually all of their income (90% to 100%). Social Security is also responsible for keeping an estimated 15.1 million retired workers out of poverty." Social security looks to be ok until 2034. At that point, what comes in as payroll taxes goes straight out of the treasury to pay social security. There is no savings. At some point, you would have to cut benefits to keep it going.
I would suggest that those whose income would qualify them as wealthy are also dependent to some degree on social security. For it to go away or even become a reduced option would not be acceptable. In fact, I think that it is social security that maybe keeps us out of the retirement crisis mode. The statistics show that people are simply not ready for retirement. This retirement problem looks like a potential crisis facing America down the road.
It needs to be fixed today. Right now you have the politicians trying to create all of these retirement programs and putting study groups together to figure out how to solve the retirement problem in America. This latest piece of legislation which is stuck in the senate does not even address social security. Keep in mind the last time the politicians even looked at retirement was 2006. We can't even remotely afford to wait another 13 years before addressing social security. Then there are all of these forced savings plan ideas where people would be forced to save an additional 4 to 5% of their income into a supplemental retirement plan. These plans would be designed to supplement social security. How about taking that forced 4 to 5% of savings and increase payroll taxes instead and save the program that they are trying to supplement?
Here is the problem:
Fixing social security will require an increase in payroll taxes. NO POLITICIAN WANTS TO RAISE TAXES THE OLD FASHION WAY TO FIX A PROBLEM...THEY CREATED. This is why the politicians are treating it like the plague. Throw away the forced savings plans, the expanded options for retirement accounts, etc. FIX SOCIAL SECURITY! Like it or not it makes a difference.
On a side note, the original objective of social security was to take care of those who couldn't take care of themselves. It was never intended to be a retirement program. Of course it was developed in 1935 which was a totally different time in America. Now it is a political hotbed depending on politicians who mismanaged the system to fix it. What could go wrong?