Social Security Essay, Research Paper
What is Social Security? Social Security was established in 1935 as an insurance program. Workers would make mandatory payments into a fund through the parole tax. Retirees would receive monthly checks from the fund when they retired. The fundamental goal of Social Security is to provide extensive and sufficient protection for the entire population against economic distress, connected with disability, death, and retirement of a household breadwinner, which might otherwise financially overwhelm the individual or their families. Social Security provides you with a four-way protection, (1) retirement benefits, (2) survivors benefits, (3) disability benefits, and (4) Medicare health insurance. Social Security also ensures that: employees, employers and the self-employed are required to participate. What Each Person Contributes h 7.65% of your paycheck goes to social security (your FICA tax) h For each contribution you make, your employer also contributes 7.65% to social security. h Your contribution goes to the old-age and survivors insurance(OASI) trust fund, disability insurance, & Medicare hospital insurance h You can obtain full retirement benefits at the age of 65
Is Our Current Social Security System in Trouble? It wasn t until I began this research that I ever gave the thought of planning for my retirement more so than I am currently. I set my wife down Sunday to inform her of what we were going to have to do in order to retire at an early age, and planning on the social security money that we will have in paid for many years should not come into play. In 1950 16 payroll taxpayers contributed enough into the program annually to support one retiree for the year. By 1994 3.2 workers were supporting each retiree. By 2030 every two workers will have to pay in enough to support one retiree.(Information Provided by The Ethan Allen Institute). Under present law, and with the retirement of baby boomers born in the 1940s and 1950s, the system will start to run annual deficits in 2013. By 2035 all of the accumulated assets, plus all of the annual payroll tax revenues, will no longer be enough to pay the bills. Social Security will be out of business. In Washington, the motto often seems to be Why do today what you can put off until tomorrow? When it comes to reforming Social Security, though, the president and Congress should realize that any delay puts the security of every American s retirement at risk. In 2012, just 15 years from now, Social Security will begin running a deficit, spending more on benefits than it brings in through taxes. In theory, the Social Security will begin tapping the Social Security Trust Fund to pay benefits until 2029, when the trust fund will be exhausted. To make matters worse, it is a good thing that in today s time we are living longer, but as for as the social security system it is a bad thing for those who would consider delaying social reform. People who live longer will draw more social security checks and deplete the system faster. Growing life expectancy is increasing the retired population faster than expected. In 1940, a 65-year old man could expect to live another 12 years. Today he can expect to live another 15 years and by 2040 this will rise to 17 years. The fertility rate is falling faster than expected. In 1960, a typical woman of child-bearing age gave birth to 3.6 children. The rate has fallen to just two today and is expected to fall even lower by 2020. As a consequence of the two above trends, the elderly are expected to rise from 12 percent of the population to 20 percent by 2050. The number of retirees will rise from 34 million to 80 million. The combination of a smaller working-age population and a larger elderly population means that there will be fewer workers to support each retiree. (above statistics found from the National Center For Policy Analysis) The impact of delaying reform will hit young workers hardest. They could earn far higher retirement benefits if they could invest their social security taxes in private capital markets. Indeed, most young workers will actually receive a negative rate of return from social security-less money back in benefits than they pay in taxes. In contrast, private capital markets have produced average annual returns of nearly 10 percent over the past 60 years. This brings us to the solution that I only see as the best alternative to replace the current Social Security System. Privatizing Social Security Much of the information I found on the privatization of the social security system was provided by Michael Tanner, who is director of health and welfare studies at the Cato Institute. The Cato Institute is a nonpartisan public policy research foundation that seeks to broaden the parameters of public policy debate to allow consideration of more options that are consistent with the traditional American principles of limited government, individual liberty, and peace. The Cato Institute said the poll found that 60 percent of Americans under 65 do not think Social Security will be available when they retire and a majority reject traditional reforms such as higher taxes, lower benefits or raising the retirement age. There have been various reasons cited as to why Social Security should be privatized, such as the need for increased savings and a need for generational equity. The underlying issue behind the movement to privatize Social Security seems to deal with where the Federal Insurance Contribution Act (FICA) taxes will be held and who will control the investment of these taxes. Involved in privatization, according to Michael Tanner, says the plan that the Cato Institute is working on entails that the worker will keep contributing the same amount of money but they would have the say so on where the contribution goes to. Tanner surveyed many Americans and they want personal control of their retirement savings. He said that support for the privatization was growing. I definitely am more aware of the state of the Social Security and the future that I am investing in. I have always heard people say that when we get ready to draw Social Security that it will not be there, I now understand why, and frankly it makes me mad as hell that I m investing (if that s what you want to call it) $3000 per year in something that I will not get a return on. I am really glad that I am more knowledgeable of our Social Security system and the insecurity it gives me in counting on it to take care of me when I retire. One thing is for sure, I will definitely began planning my investments more wisely. In closing I found the appropriate statement that Stephen Moore of the Cato Institute said, Every young person in America needs to be educated with both the sobering facts of Social Security and the advantages of a market-based solution. The legacy we should leave our children should be a financially secure privatized system, not a ticking time bomb.
In 1935 the United States of America was in the throws of the worst economic depression our country had ever seen. The President at the time was Franklin Delano Roosevelt. As part of his New Deal , Roosevelt instituted Social Security, which established an old-age pension system, to be administered by the federal government, and financed by taxes on both employers and employees. This system was to help the older citizens of the U.S. However, since its inception, Social Security has been turned into a retirement plan of sorts. Many retired and older citizens rely solely on Social Security benefits to live on. The program has been successful for the last 64 years, but in the near future Social Security might run out unless some drastic measures are taken to preserve it. The program will be collecting less than it is paying out by the year 2012 and be insolvent by 2030. Something must be done. Social Security has been a safe and reliable source of income for the old for the last 64 years. Some 42 % of elderly citizens rely on social security as a large part of their income. Every month, millions of people over the age of 65 receive a check in the mail. The preceding fact is one of the main reasons that Social Security is in trouble. When Social Security was first instituted, the percent of the population that lived past 70 was much lower than it was today. Recent discoveries in the medical field, and new attitudes towards eating and exercise have extended the life span of Americans much longer than in 1935. This means that there will be much more people receiving Social Security and they will be receiving it for a much longer time. The next problem with the system has to do with a change in demographics. There are 76 million baby boomers in the U.S. Once the baby boomers retire, there will be far more retirees drawing benefits than workers to support them. Right now the ratio of workers to beneficiaries is 3.3 to 1. In the year 2030 it will be 2 to 1. In less that 2 decades, the taxes that the government will collect from the workers will not cover the benefits that they are paying out. This will cause the government to either stop Social Security, dip more into debt by continuing to pay, or institute a plan K In light of the problem that out country is faced with, there have been many suggestions of ways to fix Social Security. The proposals include ideas such as raising taxes, increasing the age to collect, cutting benefits, and privatization in stocks. The probable first step to be taken by the government would be to increase the payroll tax. The government has proposed a 2 percent payroll tax increase, which would bring it to about 14.5 percent. They have also thought about increasing the amount of money that can be taxed (currently $68,400). This would generate a vast amount of money, however it would raise the taxes of the middle class to an astronomical amount. Besides increasing the tax, the government could possibly raise the age that people are eligible to receive benefits. It is proposed to raise the retirement age to 70 by 2029 and the early retirement age to 65 by 2017. After that, they would increase the age of retirement to correspond with the rise in life expectancy. Raising the age would serve a dual purpose, it would keep people working longer and it would decrease the amount of years that people would be collecting Social Security. By implementing this, the people would be supporting the fund longer by paying the payroll tax longer, and they would help to save money by not collecting any. The labor unions strongly opposed to this suggestion because it would affect the amount they pay for pensions. It is also advantageous to them to have newer employees who have not worked up to the same wage rate as the senior employees have. The tax and age hike would clear the problem for the near future, but the government wants to see the system safe for the next 75 years. So they propose the idea privatization. Privatization would work as follows; workers would deposit 2% of their earnings in private accounts, choosing from a wide selection of diversified stocks and bonds that are authorized by the Federal Government. The remaining 11 percent from taxes would stay in the usual trust fund. With the stock prices soaring and a bull market it seems the perfect time to invest in the stock market. But is it right for the government? The government has the opportunity to make a lot of money by investing in the stock market. The investments in the stock market would also not be subject to paying off the $9 billion in promised benefits as the fund does, which is very enticing. However, the disadvantages far outweigh the advantages. The possible repercussions of the government owning a large scale of the capitalist market are disastrous. The first scenario was the recent subject of an article in the Wall Street Journal. An economist figured out that if the government to invest the current surplus of money in the stock market, and also invest the 2 percent proposed, in 25 years the government would own a majority of the corporations in America. The government should not be able to interfere with the market to that extent. Also, at the moment, a government panel decides whether or not merging companies violates antitrust laws when they merge. If the government were to have a large stake in certain markets, what would stop them for creating a monopoly? Would government bias investment toward some industries and away from others? The government would certainly be libel for the same things that Microsoft is being charged with. These are just some of the conflicts of interest that the government would have if it entered the stock market. The most significant reason as to why it is not a good idea to invest in the stock market is due to the uncertainty of the whole endeavor. What most people don t take into account is the high risk factor involved with investing money into the stock market. The yield is high because the risk is equally high. The possible rewards don t outweigh the possible disaster that could take place. Furthermore, the stock market is at an all time apex, and we are in a bull market. Many investment analysts are predicting a major correction of the market. What would happen if the market crashed? Is there a back up plan? How would the government protect investors against large losses? These questions can t be answered, that is why it is not right for the government to invest in the market. To close, it seems to me that the government should stick with what it already does and knows how to do, that is, RAISE TAXES! I am in favor of a sharp tax increase for Social Security. There is no risk involved in raising the tax, except for disapproval by the citizens of the U.S. I would also like to see the retirement age raised to 70 and the early retirement age raised to 65. This would make it lighter on the system as I mentioned above, providing more tax and fewer people to support. The measure I would implement would be to raise the cap on the amount of money that is taxable for Social Security. This would allow more tax money to be generated. These three things would set the system straight for the upcoming years. They are stable and sound ideas that have been proven to work. Privatization is not needed, we need to balance before we try to accumulate an abundance.
The purpose of this paper is to analyze social security so as to show the reader what makes it beneficial to us today. . Throughout my life the words social and security have meant little more to me than the representation of a small blue card in my wallet, a consistent and increasingly significant deduction of funds from my weekly pay-check, and a vague academically-instilled recollection of the potential for long-term future benefit. In fact, it was not until I researched pertinent material for this particular project that I truly learned how markedly beneficial social security will be after my eventual retirement. Reflecting on precisely how ignorant I had been to the issue prior to my investigation, I realized a tragic irony which exists quite commonly within our society today; young people are not taught to save for retirement. I think that many of my friends do not even think much of saving for their college graduation, let alone for their retirement. Eventually, however, most of us will reach a point in our lives where work shall come to an end, yet the existence of living expenses will not. Social security, many of us find out; will provide us with a monthly check at this point. What we do not realize, however, is that this amount is not intended to be used as our sole source of income. Unfortunately, the tragic irony is that many of us reach retirement and realize too late how impossible it would be to live by no other means except social security. The reality is, that the program is but one benefit, one addition, and one financial supplement. Its intent is to be combined with other savings, IRA’s, retirement funds and the like. Many senior citizens retire not fully realizing this and consequently, they are forced to seek part-time employment to supplement their income. This defeats the purpose of retirement all together. Since people often expect social security to pay for all or most of their living expenses, the disappointment that comes with retirement leads them to maintain negative feelings against the social security program which is actually at no fault whatsoever. Once you have reached your retirement age you must notify your employer and the government agency responsible for paying you benifits. This is the Social Security Administration. Arrangements must be made to carry private health insurance over into retirement, and applications must be filed for government health coverage. While social security is of great financial benefit to retirees, it must not be mistaken as a financial entity on which people can live without any other sources of income or savings. Rather, social security income should be supplemented by money from pensions, investments such as Individual Retirement Accounts (IRAs) or other means. In addition to providing financial aid to the retired, social security has two other aspects: Should the worker die before retirement, benefits go to survivors: to widows or widowers and to children until they reach a specific age, usually 18. Should a worker become disabled, income maintenance is provided. Temporary injury, however, is usually covered by workmen’s compensation programs. In the United States social security is a contributory system. Workers and their employers both make contributions in the form of payroll taxes. A few countries maintain universal pension plans paid from general revenues. Other countries have assistance for those not covered by social security or for those whose benefits are inadequate. There are some exceptions to social security coverage. Government workers, including the military, often have their own pension plans. The self-employed and those who work for nonprofit organizations have also been excluded, but in the United States this policy has been changing. . In the United States there was no general government-supported health plan until the passage of Medicare and Medicaid in 1965 as amendments to the Social Security Act. (The exception was the medical service offered through Veterans Administration hospitals.) Medicare, however, is not a general health plan available to the whole population. Its benefits are for retired persons who have been part of the social security system. And Medicare does not cover the whole cost of hospitalization or other services. Therefore, similar to the notion that retirees must not rely solely on income from social security, they also must not rely solely on related health insurance. The social security benefit formula is designed so that if an individual who maintains average earnings all through their working life and retires at full retirement age, (currently 65), will have a social security benefit equalling approximately 4 0% of their earnings just prior to retirement. If, however, a retiree had minimum wage earnings all of their life, social security
Social Security anf African Americans
The conception of the social security program in 1935 was fueled with good intentions; and overall concern for shielding the elderly citizens of this nation from poverty after retirement. With the weight of demographics and fiscal pressures, the collapse of Social Security is imminent if changes are not made to the existing system. The Social Security program accounts for nearly 22 % of all federal spending, and has served as the foundation that supplements the income of many retirees. Recently however, with statistics being made available, the program’s dependability has been questioned, as the fate of Social Security has become a controversial topic throughout the nation.
Social Security is the focus of intense public interest because it is projected to have long-range funding problems. The primary reasons are demographic: an aging post WWII “baby boom” generation, declining birth rates, and increasing life expectancies are creating an older society. The number of people 65 and older is predicted to rise 75 % by 2025, whereas the number of workers whose taxes will finance the Social Security benefits of retirees is projected to grow by only 15 %. As a result, the ratio of workers to Social Security recipients is projected to fall from 3.3 to 1, to 2 to 1 by 2030 . At this rate, Social Security will be bankrupt by 2012, possibly sooner. The Social Security Administration predicts that in thirty years it will only take in enough taxes to pay about 75 percent of the benefits Americans are expecting. This is proof enough for many Americans that there is a need for reform within the Social Security program.
As food for thought for the African American community, paying into the Social Security system has a particularly disparate impact on African American males. Because black males generally enroll in college at a significantly low rate, they enter the workforce earlier, and on average, begin paying into the retirement fund at a far younger age than other Americans. Another factor that compounds this problem is the lower life expectancy of African-American males. The average African-American male often receives far fewer retirement checks than the rest of the American male population. For example, a white man who reaches the age of 65 can expect to live 15.7 years, while a black male can expect to live for only 13.6 more years . This essentially translates into the disturbing fact that many black males, who enter the workforce earlier, may not live long enough to reap the benefits of the Social Security system that they spent a significantly large portion of their lives paying into.
The provision of an option to invest a portion of payroll tax (FICA) into a private pension account would only serve the best interests of African-Americans, and Americans in general. By allowing workers to deposit their payroll taxes into personally owned and invested accounts similar to 401(k) plans or IRA’s, they would be able to deposit 12.4% into their personally owned accounts . Over time, this amount would grow exponentially in value, culminating in substantial benefits upon retirement.
Care should be taken not to confuse this form of reform with requiring the government to do the actual investing. Obviously this would be disastrous. It would entail giving the government more control into the citizens’ finances. The government’s track record with Social Security leaves one leery.
An added value to the privatization option is the fact that it would allow accumulated money in these accounts to be passed down to one’s heirs. Thus the reformed system evolves to the status of a true asset and/or a retirement package. This system would also increase national savings and provide a new pool of capital for investment that would be particularly beneficial to African-American communities. As financial institutions look for places to invest pension deposits, black entrepreneurs will be more easily granted access to capital, thereby providing the economic boost needed in black communities throughout the nation.
Reforming the troubled Social Security system is no longer optional, it is a must. Privatization provides the most feasible solution to the problems that Social Security is unequipped to handle. A new system of individual, privately controlled retirement accounts will improve the lives of working Americans, especially those of blacks and other minorities, who have been the reluctant victims of the problematic Social Security system for so long.
The skeptics are quick to alarm the public about the pitfalls of Wall Street, the crisis of the saving and loan (S&L) and the high cost of the administration of such a reform system. But they are offering an increase in social security tax as a solution . Other skeptics would argue that the bankruptcy of Social Security is a myth and it is actually turning profits. Increases taxation is not what the American people want, perceiving this as a quick fix solution and wasting of hard earned dollars.
When citizens privately invest their social security funds in privately managed investment accounts, a true sense of security can be derived and the American people especially the African American community. This community would be able to reap the benefit of their years of hard work without living on the poverty line, and such funds could also be utilized as foundation for the next generation. If a worker has invested in a typical mixed fund with 60 percent stocks and 40 percent bonds, the stocks would have to fall 89 percent at the time the worker entered retirement to leave the worker with funds sufficient only to match Social Security benefits.6
Social Security Trustee Projections
‘Answers to Frequently Asked Questions about Social Security”; Social Security Privatization Program, CATO Institute: http://www.socialsecurity.org/fags.html
“Privatizing Social Security is a bad idea” , De Shon, Mark, PolZine Editorial; www.tronco.com/zine/oped/112596.html
“The Derailing of Social Security” How Cato and heritage paved the way for privatization; Zuckerman, Diana; www.fair.org/extra/9905/ss-ttm.html
It was early spring in the year 2048 and my bithday was coming up this August 26. I would be turning 70 years and retirring. I am not looking forward to it as much as I thought. My whole life I dreamed of moving to Florida and living on the beach when I retired. I planned on traveling a lot seeing the great sites the country has to offer. All of these plans have changed instead my yougest son is putting an addition on his house so that I could move in. I am very thankful for what he is doing, but I really don’t want to go. I want my privacy and I’m sure he wants his too. There is no other choice I worked as long as I could but I’m just getting to old. We all agree that I am not going into a nursing especially me. If the government would have told us that they couldn’t solve the Social Security crisis almost 30 years ago I would have prepared better. But instead they promised they could save it and the program would still be aruond when I retired. They obviously lied and now I have nothing. Moments later I hear music its my alarm clock. It was only a dream its April 1996 and I’m 18. The article about the Social Security in the paper had me thinking and I must have a bad dream. The Presidential election will be coming up this November 96 and the question that many of Americans have on their mind is what are you going to about the Social Security crisis? This question has our nation divided between generations. The elder people of our nation (ages 50 and up) feel confident that Social Security will be there for them and that it should be left alone. On the other hand the Baby Boomers (ages 31-49) and Generation X (ages 18-30) lack this confidence fearing that they will never receive Social Security, and the money they put in would be a waste. Many politicians are afraid to touch this issue because the elder still make a large number of the voting block. Speaking as a member of Generation X it is our duty to vote for change in Social Security to ensure we will have something to look forward to when we retire. We can not wait any longer to defeat this crisis. The Social Security crisis is the threat of the Social Security system going bankrupt. Well its more than just a threat its the reality. The common belief is that Social Security is a saving fund where the government takes a certain percentage out of our weekly pay. Then that money is put into a savings fund where it is held until we retire. When we retire the money is returned to us in monthly checks plus the interest. This is where we are wrong. Social Security is a pay-as-you-go system where the current workforce pays for the present retirees, and then when they retire they will depend on the younger workforce to pay for them and so on and so on. Which is fine when you always have more workers then retirees. This is the problem the government will face when the Baby Boomers retire in the year 2010. In 1950 there were 7.2 workers for each retiree. Today there are 3.2 workers for every retiree, an by the year 2020 there will only be 2.4 or less for each retiree. By the year 2010-2015 Social Security is projected by the government to pay out more money than it could take in. Since the current Social Security took in a surplus of $60 billion last year with a projected total to be around $5 trillion they will have enough money to last another 10 years or so. All in all experts expect that Social Security will have spent every penny it has by the year 2030. In actuality the bankruptcy will probably happen about ten years sooner. See there is a catch to their surplus that not to many people know about. The surplus is put in to government bonds so that government can use that money to support other programs and to pay of other debts. Also when the government figures out the national debt they subtract that surplus to make the national debt look smaller. The problem will come when Social Security needs that surplus to support its program and the government has to pay of these bonds. The United States will go further into debt having to severely raise taxes and drastically cut government programs. Or they won t pay the their debt and the American retirees will be out trillions of dollars. There are also two other contradicting factors that boggle the minds of almost all Americans. First as we all know the life expectancy of people is getting larger. In 1940 a man at the age of 65 could expect to live another 13 years; today they could expect to live another 17 years. The government figures by the year 2000 many people will have collected half as long as they have worked. The twisted part of the whole thing is that citizens are beginning retire and collect benefits earlier then ever. More than half of all retirees begin collecting benefits before they are 65. The average at which people began collecting went from 68.7 in 1950 to 63.7 in 1991. The Government has tried to institute new polices and reform old ones, but they are falling short over the long run. In 1993 the President pushed a tax that stated 85% of Social Security became taxable income to people with substantial amount of other retirement savings such as pensions and personal savings. What they are telling is if you are one the smart people in America that pre-planned your retirement with other savings and not just Social Security they can put heavy tax on your Social Security checks. Now you would have to pay twice once whiled you worked and again when you retire. Its has if you are being punished for doing the right thing. Another tactic many government official are trying to push is raising the payroll tax 2%. The current tax is 12.4%, 6.2% from the employee and 6.2% from the employer. This would aid us temporarily, but would do nothing to stop the long term problem. “To maintain the systems solvency, taxes would have to be increased, or benefits cut, between one-half and 1 percent every 10 years” (Bosworth 36). If you do the math you will realize by the time Generation X retires the payroll tax needed to keep Social Security going will have almost doubled. The higher tax rates will start some sort of recession with people getting far less out of their pay checks to live on. Anyway who wants pay more taxes. They would also like to cut many of the benefits that Social Security offers, but why should we pay more and receive less. The U.S. government has dug itself into a whole waiting to the last minute to save Social Security. When by simple demographics years ago would have showed the same problem. They have to get it out of their heads that Social Security is such a great system that can be saved. Well it was great a the time, but as we know times change. The only way to save Social Security is to completely overhaul it. With the best way to overhaul is by the introduction of partially privatizing Social Security. It help bring Chile social security system out of bankruptcy. In 1981 Chile privatized it social security by requiring their workers to put 10% of their pretax wages in private pension funds. The funds are carefully regulated, and workers can switch among trust fund managers for better returns or lower costs. They also receive periodic statements. Upon their retirement they receive their money to buy annuity. What ever is left can be passed onto their heirs. If there isn t enough to provide a descent living the government steps in guaranteeing a minimum. Now Chile enjoys a high savings rate well over 20% of their gross domestic product compared to the US s 3.2%. The plan has been pushed here heavily in the states by Senator Robert Kerry of Nebraska (D). The plan would not allow people to drop out of Social Security completely like some other more radical plans, but to divert a percentage of their payroll tax into accounts that work like Individual Retirement Accounts (IRA s). The Senators plan proposes that 2% of the 12.4% tax would be taken out and placed in private accounts set up by the government. The money would be one s own personal account with compound interest (Congressional Digest 246). The Institute for Research on Economics of Taxation (IRET) adds, “that they would not be able to touch that money until they retiree or become disabled. The money is theirs the government would not be allowed to touch it. If that person should die the money would be added to their estate” (Congressional Digest 248). The Cato Institute (a nonprofit public policy research foundation founded in 1977 whose publication, conferences, and seminars are designed to illuminate private sector, voluntary solutions to social and economic problems) also adds, “that those presently in the workforce would have the option of remaining in the current Social Security system or switching to the new private system. Those entering the workforce after the implementation of the new private system would be required to participate in the new system. Thus the current system would be eventually phased out” (Congressional Digest 244). The plan also has guidelines to problems and questions that people have or arrive. First off people begin to question the safety of the government handling their own personal money. It a viable question considering our national debt and the way they spend tax money, but the there is a viable answer. If you let people drop totally out of Social Security and have their own pension plan there would be know way for the government to keep track and ensure that people are saving. Then when these people begin to retire and we find out that many of them never saved any money and will have no monthly retirement checks we will have a poverty struck elder class that the government would have to bail out. In conclusion to ensure that everyone has money set aside for retirement the government has to control the money. Another common critique is how much is 2% going to save? It wills save a lot more than the average person thinks. Currently Social Security takes a dollar from the worker and gives it directly to the retiree with no growth or interest. The IRET states, “With compounding interest at a 7% real return, a dollar saved at age 20 would be worth $16 at age 60 and $32 at the age of 70″ Congressional Digest). That s more then the current system could ever own up to. Many critics also wanted to know what would the new system do about people who earned low wages and wouldn t have a substantial amount of money set aside to pay for retirement. The Cato institute proposes a minimum savings amount, acting as safety net. It would be a number to a similar to the minimum wage where if the individual doesn t meet the amount specified to earn a livable monthly payment the government would supplement the difference to bring the monthly income up to the correct level. The money would come out of the other 10.4% that people still pay into. They also report considering the rate of return even someone making minimum wage their entire life would still have enough to meet the monthly requirement (Congressional Digest 244). Concluding that the safety net would only support a scarce few. This would also keep our nations poverty level up. A questions many Americans have is where do we begin? You begin with all age groups including people in their forties and fifties. For these people who are getting close to retirement and wouldn t have a substantial amount saved up the government would take the benefits earned from year to date and put them into a bond. The bound would be put along with the 2% they begin saving. The money would earn interest together so when these people retire they will be shore to receive the money they deserve and then some The only problem the plan doesn t solve is the problem that can t be solved. This is how do you support the people already collecting their Social Security. Social Security will have to use their surplus, but as stated the government has already used this money. In order for people to get the money they deserve the government will have to cut their loses and pay back their bonds. It will severely hurt the budget, but what choose is there. No plan would have been able to solve this dilemma it would have happened anyway. What more can you say? The time to change the Social Security system has come. The program considered by many to the prominent leg of the three legged retirement stool, along with pensions and personal savings, is growing week. ” Kthe result for retirees almost certainly will mean that the one leg of three legged retirement stool is going to get wobblier” (Wechsler 25). The government is going to have to act now to prepare for the future because if they wait any longer the leg mine as well just fall off. The government is there for the people and I m sure they don t want the suffering of Generation X retirees on their conscious. I don t want this to happen. I would like to work hard in my life looking forward to luxury of retirement at the end, and as a citizen of this country I should be given that right. If the system goes bankrupt that luxury just maybe taken away. The only way to ensure that Social Security will be around for the young people of this country is to instate the partially privatization plan. Years ago it was considered to radical of an idea, but now it seems that there really no other choice. It s the only plan that shows some hard facts to support it goals unlike many of the other plans by Congress or President. You have read the argument and you now the facts I don t know how anyone could think otherwise. It took Chile out of bankruptcy it will do the same for us to. What do we have to lose.