Retirement?

Has the United States of America saved enough for this rainy day? (A Proposal.)
By Appreciable Goodfaithpoet

Thinking ahead isn’t something that comes easily to human beings. We don’t enjoy thinking about the possibility that our health may decline and that we may not have enough money to finance retirement. Many of us may spend our golden years short on money, bedridden, and in a state-run-no-frills nursing home. This is a possibility for many of us, and it’s not very pleasant to think about. No one looks forward to a situation that wipes out the assets they have worked so hard to acquire. When I think about these issues, I get a knot in my stomach that’s hard to untie.

Our Country is currently struggling with the prospect of keeping the Social Security promises that were made to the retiring baby boomer generation. This is a looming problem on the horizon for all Americans. The baby boomer generation is nearing retirement and this juncture in history is a potential problem because of the shear number of retirees that are slated to draw upon the Governmental retirement plan called Social Security.

Many people accuse the Republican Party of turning a blind eye to Civic Charity. However, the policies and platform of the Republican Party may actually do well in removing the larger portion of responsibility to care for the poor out of the hands of an ineffective and wasteful Federal Government. Removing this funding can lower taxes and thus put more money into the generous hands of all Americans who then can freely give their surplus into the hands of effective charitable organizations and denominations. Religious organizations and non-profit charities are the most effective in caring for the poor. These charitable organizations are so much better at solving the problems and inequities of society at the grass roots level. Will we remember the lessons of the New Orleans Hurricane Victims? What a contrast it was to see the slow, wasteful, and ineffective response of the Federal Government compared with the effective and financially streamlined response of the Religious community, who arrived first on the scene in many cases. It is the Non-profit and Religious organizations that are still working to improve and build those communities today. I do not mean to imply that Religious and Non-Profit Organizations can solve all of the problems faced in the disaster that is this Nations current economic setting, However, I do believe that non-governmental Organizations, in general, are a far more effective place for us to put our money as we look for ways to help the poor.

In our capitalist economy, perhaps one of the reasons that the weary human cogs in the industrial machine often get overlooked, is that philanthropy has become institutional and bureaucratic. The idea that government should be a modern day Robin Hood is not, in my opinion, the answer to poverty. Churches and private charities are the way to go. Non-profit organizations are in a better position to separate the truly needy from those persons with values adversely affected by government programs that solve problems by doling out money in a blind and bureaucratic way.

I think more money would be donated to charities if the federal income tax allowed a true exemption for such donations instead of tying them in with the standard deduction. If you donate $5350.00 to church or charity you get exactly the same tax exemption as the person who donates nothing. In all fairness charitable donations should be exempt in addition to the standard deduction or the latter should be done away with. This would increase charitable giving dramatically and the money would be used more efficiently to help more people. The inadequacy of the Social Security system is the best argument against trusting the Government to solve our financial problems. The Government as a whole, sometimes acts like a political candidate on the campaign trail, promising what ever it takes to win favor and then never following through on those promises. Leave it up to the government to give us a special, mandated retirement program in which we pay more and get less.

The best plan for families as they plan for retirement is to get out of debt, stay out of debt, and live within their means. I know this is not possible for everyone and that is one of the reasons that, on top of what the government takes from my paychecks to help the poor, I donate an additional portion of the money I make each month to help those who are struggling with poor health, poverty, and starvation.

If you were born during the mid-seventies, you may have been raised by the baby boomer generation. The children of this generation had been raised by parents who’d survived the great depression and thus, had learned and passed on the virtue of being thrifty. Living modestly and avoiding debt were basic principles that many of this generation learned from their parents. The parents of the baby boomer generation had been exposed to the horrors of World War II and thus had come to value the peace and prosperity that they had so dearly purchased. They came home from the war and focused on bringing children into their homes and it worked very well. The increased birth rate at that time is known as the baby boom generation.

In “ ’The Solution to the Retirement Income Challenge,’ by Alicia H. Munnell and Steven A. Sass (Brookings Institution Press). Ms. Munnell and Mr. Sass define succinctly the problem faced by baby boomers, and for that matter, by all Americans who aspire to retire now or in the near future. They note that the nation’s retirement system, as embodied by Social Security and Medicare in the public sector and I.R.A.’s and 401(k) plans in the private sector, is contracting in its ability to replace workers’ lost income — even as life expectancy is increasing.

“ ‘About 19 percent of men and 33 percent of women who survive to age 65 will live to age 90 or older and have to support themselves for almost 30 years,’ the authors report, adding matter-of-factly, ‘The arithmetic does not work.’
Citing a plethora of actuarial studies, Ms. Munnell and Mr. Sass estimate that people who retire at age 65 today can expect Social Security to provide the equivalent of only 39 percent of their incomes after deductions for basic Medicare contributions. Those who plan to retire in 2030 can expect net benefits, similarly calculated, of only 30 percent of their incomes.” (“Who Wants to Retire Later?” Harry Hurt III, N.Y. Times, July 20, 2008.)

In proposing a solution to the insolvency of Social Security, I want to stress that there are many changes that need to take place in our Government. The Government must find a way to fulfill the promises it has made to its people. This can be accomplished only by allowing philanthropy to be more voluntary, this is the only way to cut costs and get federal spending under control. I believe that the next step must be to increase the retirement age from 62 to 66 years old. In order to “save” Social Security we must give the baby boomer generation the option of cashing out their Social Security benefits early at reduced rates and re-investing in Stocks, Bonds, Mutual Funds, Annuities, and Precious Metals. Following this plan would give retirees a choice between privatizing or continuing to rely on the future Social Security benefits they’ve already been promised. I propose that workers who are at least 56 years old, be given the option of privatizing their Social Security portfolio. The appeal of privatization is that workers who choose this route would no longer have money taken from their paychecks to fund Social Security. The monetary compensation for privatizing would need to be less than the current forecasted social security payments. However, with a lump sum investment from their Social Security portfolio and an aggressive investment program funded by the additional money in each paycheck, they could invest for the remaining ten years of their career and potentially receive a much higher return than the promised Social Security benefits.

This plan would give the government the ability to invest up front and save a great deal of money down the road. Retirees with the courage to privatize would also gain the ability to retire as soon as they are in a position to do so. Those of us who are younger than 56 years old will need to continue on with the federally mandated ball-and-chain of Social Security taxes automatically taken from our paychecks. Our parents have supported us in the past and we must fulfill our duty and help the Government keep its promise to support the baby boomer generation during their golden years.