The Future of Social Security

With the baby boomer generation aging rapidly, many are left wondering what will happen to them as they stop working and start collecting social security. Currently, there is no social security for our parents, never mind us. But the Bush administration plans to change that, with a new deal that will have the government borrowing up to a possible two trillion dollars. Bush has made reform of the US retirement program a top priority in his second term and will push for creating more private accounts. Economic advisors have been evaluating the situation for some time now. With the highest federal deficit in he history of the country, and Bush’s promise not to raise taxes, there are very few options to help out the nations largest population. Borrowing has only recently become an acceptable option. The administration does seem to have a new idea of how to save money for generation X, however. White House spokesman Scott McClellan told CNN reporters earlier this week that “there will be some upfront transition financing that will be needed to move toward a better system that will allow younger workers to invest a small portion of their own money into personal savings accounts.” What this means is that instead of our money being put into a general social security account that everyone shares, it will be private. You earn exactly what you, personally, earn. McClellan declined to say how much the transition would cost. Economic advisors feel that government borrowing would have less of an impact than doing nothing. The reforms will definitely increase the nations debt, but should fall again once the reforms have been phased in. Democrats, who have vowed to protect Social Security from “privatization” by Bush and his Republican allies in the U.S. Congress fear that the nations growing debts could soon drag on the nations economic growth. To this, McClellan says that social security is “unstable” and “needs to be fixed.” According to the AARP, privatization is a risky game. Diverting money away from Social Security and into individual accounts is risky and involves trading some of today’s inflation protected, lifetime guaranteed benefit for an account subject to market risk and not guaranteed to last a lifetime or keep pace with inflation. Inflation, market turns or loss of employment can mean that your private account may not have enough money to provide an adequate benefit(www.aarp/socialsecurity).” Indeed, Social Security was bound to fall flat at some time. When it was created, a much smaller population wasn’t living much past 70. Today there are millions more people dipping into funds, for many more years at a time. Currently, part of your pay check goes toward Social Security. Payroll taxes are used to pay for benefits. With your money now going into a private account, there will be less money available for the benefits we have all grown fond of. This also means that younger generations will be paying twice to avoid major cuts- once to fund the private accounts, and again to meet current obligations. This idea was first discussed when Bush ran for presidency in 2000. For the rich, this is fine. If you make a lot of money, you won’t miss the extra coming out of your paycheck every week, and you will have a good sum of money saved by the time retirement rolls around. But for everyone else, especially those living from paycheck to paycheck, this will make life even harder, and there won’t be that much money for them once they reach retirement age. Social Security has traditionally been protected from government borrowing. A 1996 law changed this, although it has only recently been implemented. This law allows for certain government groups to take from Social Security Retirement and Disability benefits, Black Lung Part B benefits, and certain Railroad Retirement benefits. While these don’t affect much of the population, there are some Americans that will suffer. According to the National Consumer Law Center (NCLC), supplementary Security Income is not allowed to be taken from. The first $9,000 are safe, and the government cannot take more than 15 percent of what you earn. For some though, 15 percent is more than they can spare. The only groups that can take from your benefits are student loans, food stamp overpayments, and other such groups that borrow from the government. As students, we have the right to know what the government is taking. According to the NCLC, you should get a number of warning notices, known as offsets, informing you that your benefits will be taken. You have the right to have a hearing with the group that is taking your money. If you owe on a student loan, you can have a meeting with the Department of Education. You have the right to challenge the offset, or set up a repayment plan in order to avoid your benefits being taken. Check out www.edu.gov for more information. Starting in January, Social Security beneficiaries will receive a 2.1 percent increase in funds, due to a rise in the cost of living. This means an average of $19 a month for the average recipient. Medicare premiums will take a 13 percent hike, according to the Associated Press. Next months increase will be the third largest in history for Medicare, second largest for Social Security.