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Preparing for the future, what’s that all about? I’m not talking about hitting the mall and picking out a hot outfit or grabbing a case of Coors Light longnecks for the weekend, I’m talking about your adult future.
Most college-aged people are fixed on the short-term future of graduating, Spring break or starting a career. Rather, we need to take a peek further down the road, especially concerning investing. President Bush recently unveiled his plan to protect Social Security for our generation. Economists have put in their predictions; and they have their own estimates of what year the Social Security program will be bankrupt. Every working American noticed a huge chunk of money taken out of their hard-earned paychecks. The average American worker has 12 percent of their earnings taken out for Social Security, compared to the original two percent when the program was created.
I was relieved to hear Bush’s plan. The idea of paying a portion of my income to someone’s grandmother doesn’t bother me, but what does bother me is that I’ll be paying money to support someone else while I’m left high and dry when I hit retirement age.
President Bush’s plan would allow me and other young workers to deposit a portion of our current Social Security pay-in to personal private investment accounts. Workers would be allowed up to four percent of their income, or one-third of their current Social Security pay-in, to be deposited in their accounts. Under the proposed plan, participants would be able to leave their accumulated savings to members of their family, which is not available under the current Social Security plan. The worker’s’ investments would be used to purchase an annuity at retirement age, ensuring that money is evenly distributed over the remainder of the retiree’s life. But the money would not be available to be withdrawn for a worker to buy a boat.
Whitehouse.org states that currently Social Security is sound for today’s senior citizens and those who are nearing retirement, but needs to be overhauled for our generation of workers. In 1950, there were 16 workers to support every Social Security recipient. Today, there are only 3.3 workers supporting every Social Security recipient. By the time we try to retire at 65, under this defunct system, there will only be two workers supporting each Social Security recipient. And, under the current broken system, today’s 30-year-old worker will face a 27 percent benefit cut when he or she reaches normal retirement age.
“If you’re 20 years old, in your mid-twenties, and you’re beginning to work, I want you to think about a Social Security system that will be a flat bust, bankrupt, unless the United States Congress has got the willingness to act now,” Bush said to the Washington Post.
The Washington Post reported that the White House has said that Social Security is projected to start paying out more benefits than it collects in taxes in 2018, when the baby boomer generation looks to cash in. The White House said that although Social Security can then dip into its substantial reserves, the system can only pay promised benefits until 2042. You know what that means: We’re on our own if the Bush plan is not approved.
For President Bush, his biggest critics might be in his own Republican party. Seniors shouldn’t think they are going to receive less, because in actuality their benefits will not change. President Bush is attempting to save a system and protect all their grandchildren. He isn’t attempting to rip the marble rye from nana’s arms like Jerry Seinfeld did, but instead ensure that the younger workers who are paying in now actually have some of their earnings repaid in the future.
Most of us, in our relatively young lives, haven’t been exposed to the importance of investing and saving. Investing and planning now will be vital to our way of life when we are playing backgammon and our hair is grey. I can’t count the amount of times I’ve heard my parents talk about investing for their future, and that they’re not planning on relying on Social Security. That is only compounded by the fact that my father laughs at the idea that Social Security will still be writing checks for my sister and I when we hit our late 60s. We need to have a backup plan, rather than relying on bureaucrats dictating our retirement livelihood, and start saving now.
I commend President Bush for attempting to fix something that we all know is broken, rather than just accepting that its broken. He won’t have to bother with it when it goes bankrupt, because he will be long gone and unaccountable, like most of our Congressman and Senators. Maybe if young workers had a high voter turnout, they would get more consideration when they are attempting to protect their retirement futures.
Kristin Saunders is currently saving all her pennies in her piggy bank for her retirement.
