Fixing Social Security

"These accounts, properly constructed and managed, will create ... a sense of increased wealth on the part of middle and lower-income classes of this society, who have had to struggle with very little capital," - Greenspan told the House of Representatives Financial Services Committee.

As I have posted in the past, the greatest gift that we can give those in future generations is to teach them that anyone in America can create wealth. Home ownership, retirement savings and now maybe a fundamental change in the way we view Social Security. Yet the polls are out there leading us to believe that the American people are not ready for this shift as highlighted by the following post from Professor Bainbridge. This simply highlights how far we must go to educate people on how to achieve financial freedom.

Yesterday, Hugh Hewitt in the last hour of his show conducted a simple exercise with his audience in politics and compromise on this issue. Looking at how people may trade off the pain of increasing the withholding base for Social Secuity taxes from the current $90,000 per year to a higher number as the President hinted at yesterday. It was easy to see just how much fear has to be overcome. High income earners do not want to pay the higher tax of this change. Employers do not want to face this change. AARP is lobbying away from privatization in the belief they are protecting their constituents. Yet we need to think of the alternatives. The withholding base has been rising and will continue to rise. The rates could be increased. The retirement ages could be adjusted up so that we need to work into our 70's. These are the alternatives just to make the system as it functions today work. They are not great solutions for those that make lower incomes or have spent a life doing tough manual labor, and the mechanism is already in place to raise the wage base and taxes of higher income wage earners.

The time has certainly arrived to look at the alternatives of the Social Security system, and how we will make it work in the future. Social Security has always demanded sacrifice by all to benefit those that are challenged to provide adequately for all their years. If our only concern is how the system will work for ourselves, it is unlikely that it will truly work for everyone.