Privatize Social Security for Bigger Profits

 

With the baby boomer generation retiring, and as we head towards the shaky scenario of a large retired population being supported by a diminished productive population, it is time to talk about Social Security.

 

As of now, it is expected that the primary, and for some, the only, method of preparing for retirement is through government run “Social Security,” in which the productive citizens are taxed and that money directly supports the retired population.  In 1945, the ratio of workers to retirees was over 40:1.  Today, it is 3:1.  It is time to think of alternatives to Social Security. 

 

There are two primary ways to save for retirement, other than to save your pennies one by one in your own safe or saved in a bank.  One is Social Security the other is to invest in stocks. 

 

Under both, the benefits received at retirement are not dependent on how robust the economy is now but in the future.  Under the Social Security plan, you are not giving your money to the government, which they then put in a box somewhere and give to you again later. Instead, you are paying taxes and that money is going straight to fund retired people. When you are retired, the money you receive will not be based on the economy now but when you retire. If you were to invest your money in stocks now to cash in on them later, it is also not based on how good the economy is now but how good it will be when you go to cash those stocks.

 

There is one major difference between the two types of retirement plans:  investing in businesses encourages them to flourish creating a robust economy in the future; taxes discourage businesses thereby creating a depressed economy and thus decreases the money available in the future. The pickings that you can pick from in the future will be much larger if the money you had were going to investments rather than to taxes.

 

Investors are the drivers of a healthy and robust economy.  Investors provide the water necessary for seedling businesses to grow.  Like the farmer who doesn’t consume all the seeds he has, so he can have some for next year’s crop, the investor is what keeps the economy moving forward, as most businesses cannot start from scratch.

 

The Social Security tax burden is in direct competition with the money that could be invested by private individuals.  As any person struggling with a budget will tell you:  they cannot invest in stocks except with money they can “throw away.”  As such, with the heavy tax burden, they are limited to some degree, either completely or partially, to invest their money.  Instead of that money going towards the expansion of new businesses, it is literally thrown to a black hole of consumption.

 

Being invested in stocks instead of paying dues towards the stagnant Social Security system will create larger profits for individuals as they enter retirement.  Being invested in a company instead of relying on the government for retirement also protects against another, larger “tax” burden on the American people: inflation.  How often does the Social Security system adjust for inflation?  Money wrapped in stocks, which is money made off of higher priced goods, automatically adjusts itself for inflation.  

 

Many are scared to invest in the stock market.  For instance, some may point to the experiment in which expert stock analysts pick stocks versus a dart being thrown; and the dart wins.  What is usually never mentioned is that the dart picks several stocks while the professionals are only allowed to pick one.  This is not proof that the stock market is completely whimsical, but that diversification, i.e. putting your money in several different stocks in several different markets, is key to successful investment.

 

What one should be afraid of is the shaky economic scenario that the Social Security system puts our country in. Do you think that social security is a “sure thing”? Don’t be so sure. How long can the government loot the productive citizens at a mind-boggling ratio before the economy grinds to a halt? A 3:1 ratio is reason to get scared. What will you do when there are no jobs, no infrastructure, no loans, no investments, i.e. nothing left to loot anymore?

 

Privatizing social security will allow people to spend, invest, or save their money as they wish; put their money to work for them; and invest in the nation’s future.  It would guarantee a forward moving economy, instead of our current situation – in which the heavy burden of many retired people is and will cause instability and possible economic depression.