Social_Security_Opt_Out

It gives poor people a better chance to retire wealthy. Americans living at the poverty level must usually spend every cent of their disposal income just to survive. Few in the lower-middle class have the funds available to put into a wealth-generating retirement account. Thus, they must rely on social security income to pay the bills when they reach retirement age. Unfortunately, the current social security payouts are at or below the poverty level. The money you earn in benefits based on what you pay in is less than what you'd earn in a passbook savings account. Talk to any person of wealth in this country. Do they have their money stuffed under a mattress' Is it in a taxable savings account earning 1 percent' Of course not. The majority of their money is going to be invested in stocks, bonds, real estate, and other wealth-building assets. The private accounts would provide a method of forced savings that would allow poorer people to participate in the advantages of stocks and bonds, allowing many to retire wealthy. For example, an individual or family that earns an average of $30,000 during their working lifetime (age 18-65) will accumulate $213,743 in their private account based on a very conservative return of 5 percent. If they earn an average return of 10 percent (which is close to the historical rate of return on the U.S. stock market), they will have accumulated $1,046,370 when they retire. That's right -- a family making only $30,000 per year would retire as millionaires just based on the private accounts alone! Remember that the private account is only part of the benefits paid out by social security. The other 8.4 percent of taxes would go to the general trust fund which would be used to pay additional monthly benefits outside of the private account. In addition, Americans still have options outside of social security to invest for retirement -- 401(k)'s, IRA's, pensions, and so on. Obviously there are no guarantees, but private accounts give every American a better opportunity to retire wealthy. It makes up for inevitable benefit cuts that must eventually be made to the system. As many Americans are starting to become aware, the social security "trust fund" is not a diversified portfolio of assets waiting to be distributed to future retirees. It is a bucket of worthless government IOU's. Social security is based on a pay-as-you-go system. Social security taxes collected from current workers are used to pay benefits of current retirees. As the baby boom generation reaches retirement and life spans increase, the number of workers paying in will shrink while the number of retirees collecting benefits will increase. The system is currently not sustainable on its present course. This means taxes will have to rise or benefits will have to be cut. Tax increases are opposed by the Republican-controlled House since it could stifle a fragile economic recovery. Thus, benefits will have to be cut; i.e. the start age of benefits will have to be extended or the monthly check reduced. Private accounts would allow a larger accumulation of wealth that will make up for the inevitable benefit cuts. In other words, new retirees can at least do well as they currently are. The stock market should get an initial bump in value. Over 40 percent of Americans currently own stock in some form, most notably in 401(k)'s, IRA's, and pension funds. The implementation of private accounts would mean more money would be injected into the stock market. Thus, by the laws of supply & demand, the market should go up in value. People are given a personal stake in the U.S. economy, providing extra incentive to help their companies and the nation as a whole to do well. Many Americans feel disjointed from the success of their companies or the U.S. economy. In other words, if the stock market goes up or their company turns out record profits, they don't see an additional dime. They don't have a personal stake in the outcome. Thus, they are less likely to be motivated to do their best. After all, if they have no personal stake, it seems like they're just working to make rich people richer. The use of private retirement accounts would ensure that almost every American owned stock in some form. Thus, everyone would have a personal stake in the health of the U.S. economy. However small, this would lead to a greater motivation to give their best effort. More and more people would realize that the success of their company and the U.S. economy is good for everyone. Personal responsibility and ownership are injected into citizens' plans for retirement. It is unfortunate that the revolution of government programs instituted by FDR to help the less fortunate have led to a cradle-to-grave entitlement mentality. Too many Americans now believe that the government owes them a living. They are less motivated to work and save because the government is always there to bail them out. The whole idea of former President Bush's "ownership society" was the philosophy that if people reap the rewards or suffer the consequences of their own actions, the maximum benefit for society is achieved. Think about it from the perspective of yourself only. If you didn't have social security (or other entitlement programs such as unemployment compensation), would you be more motivated to save and invest' Would you be more willing to work hard to ensure employment security and success' Would you be more willing to take a less-than-perfect job if you were laid off' Private accounts force people to take a good hard look at their retirement planning. In other words, it returns personal responsibility to a system that badly needs it. If you want to see the negative effects of an entitlement mentality, take a good look at the double-digit unemployment rates in social welfare-rich countries like France and Germany. Stocks & bonds are historically safe in long-term diversified portfolios (as evidence by their existence in every major government/union/corporate pension & retirement fund). Any investment advisor will tell you that a diversified mix of stocks and bonds is very safe over the long term. Americans wouldn't have the option of withdrawing funds from their private social security accounts; thus, they'd be forced to invest long-term. In fact, almost every major government and union pension fund has a significant portion of its assets invested in stocks and bonds, which is the way its been done for almost a century. If stocks and bonds are so risky, why do almost all professional money managers continue to recommend them' Individuals who die early and don't recover all they paid in can pass on funds to their next of kin. A person who earns an average of $40,000 during their working life (age 18-65) will pay a total of $233,120 in social security taxes after you add in the business share. If that money had been invested in conservative investments that earned 5 percent, you'd have $883,472 by the age of 65. At a 10 percent return, that person would accumulate $4,324,995 by age 65! How much does that person get if he dies before collecting his benefits' Zero. The money belongs to the government. He has no power to leave it to charity or put it in a trust fund for a grandchild's college. Under the private account plan, you would own the money in your private account. The government could never touch it, and you'd be allowed to dispose of it in your estate just like any other asset. Billions of dollars will be injected into corporate investment, leading to an economic stimulus. Every economist will tell you that the key to growth is new investment. Economic growth leads to lower unemployment, lower inflation, and a greater standard of living for society as a whole. The implementation of private accounts would mean a significant amount of money would be invested into the private sector. And since money could be shifted around, the most efficient and successful companies would gain additional investment funds. One of the best "leading indicators" of a successful U.S. economic upturn or downturn is the U.S. stock market. Experts almost unanimously agree that the stock market would go up with the use of private social security accounts. One of the foremost economic experts in the world is Fed Chairman Alan Greenspan; he happens to support the idea of private accounts