At some point it becomes time to accept the consequences of bad management choices and abandon a bad plan in order to move forward in a positive direction. Such is the case with Social Security.
As has been reported by multiple news outlets, Social Security will be in the red within approximately another year. It will be devoid of all funds by 2036. Because the government chose to raid these funds and make them a part of the general fund for budgeting, there will be no money available for what has been promised to tens of millions of retired Americans who faithfully (albeit involuntarily) paid into a retirement scheme that was originally intended as a supplemental retirement income.
We know that, historically, stocks average an annual return of somewhere close to 10% to 11%. If money is invested from an early age (and this has been compulsory for every working American), then those sorts of gains are available to people investing and planning for retirement. Just imagine a return that outpaces inflation by at least 6% to 8% and the benefits of such compounded multiplication on available funds in retirement. Rather than having retirement funds raided by crooked politicians who stole the money, now we have Americans able to retire comfortably on healthy returns.
We know absolutely and without a doubt that the current system of spending 100% of those funds rather than investing them does not provide anything in the future. Instead, we will either have to renege on promises made, or we will have to continually add to the ever-increasing US debt. At some point, we have to admit obvious failure and move toward something that will actually work.
Dissolving the program and failing retirees that have come to depend on the money that was promised to them would be unethical. Also, continuing to make promises to younger generations who have yet to retire would also be unethical. It’s important that both groups be addressed now, not later.
The uneasy, but probably most ethical plan, is one that makes things far worse before it can make it better, but I think it’s the only ethical way to resolve this terrible situation. It’s just too bad we can’t those who stole the lost funds liable for repayment – the dirty politicians who have no issue with stealing money. Unfortunately, they don’t have the funds equivalent to what they stole.
So, I think the best way forward is to accept that the current couple of generations of retirees are going to painfully add to the continuing US debt, but we must rip off the bandaid and end the program for anyone under the age of 40. It is unfair that they will lose everything that has been stolen from them for the purpose of Social Security so far, but it will also be unfair to all Americans who will garner new debt that isn’t their fault. Everyone will lose, but it puts an end to a program that will never be viable, and it accepts that politicians have already made a mess that can’t be resolved without a lot of pain and suffering.
By allowing people under the age of 40 to invest their money in private retirement rather than having it stolen by government (we end the payroll deductions), people have enough time to be better off than they would on Social Security. The burden of not having those funds placed into the system for current retirees and those who will retire over the next 22 years will compound problems far more until they get better. But if we do not take a painful way out now, things will be far more painful in the future.
It is far beyond time to phase out Social Security and accept its insolvency before the problem gets worse. Ripping off the bandaid always hurts. Accepting failures can feel catastrophic at times. But the longer we add future generations to promises that can’t be kept, the worse this problem gets.
I suppose really ripping off the bandaid would entail simply dissolving the program altogether and giving all current and future retirees the shaft, but that isn’t really a good resolution to the reality that too many people depend heavily on their promised Social Security for income. It isn’t their fault that despicable political people stole their money. They didn’t have a choice in this. Their money was forcibly taken from them, and they were promised they would get it back.
In the same manner, it’s time to phase out all entitlements, but that’s a topic for another discussion.
Continuing to rack up a never-ending debt that can never feasibly be repaid is the wrong course of action. Accepting that it can’t continue and doing what is painful now to avoid what is more painful later is the best way forward. The US government has been lying about its obligations for a very long time. Most notably since Franklin Roosevelt made promises that could never be kept, and the promises kept growing from there. This is all going to be painful and nasty, but it’s necessary to correct past wrongs. And, the sooner it’s done the better off we will be.
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