Private Accounts

AARP, in the May issue of the Bulletin, http://www.aarp.org/bulletin/socialsec/sssaveit.html, provided an Editorial and an article entitled "Keeping It Afloat." by Thomas N. Bethell. The editorial favorably referred to the 1983 compromise in the US Congress which led to the current status of the program. The article proposed 8 ways to keep the system afloat. Of the 8, five would increase the amount paid into the system, primarily by working taxpayers. The proposals were to (1) raise the ceiling on the amount of payroll subject to the earnings tax; (2) raise the payroll tax rate; (3) raise the retirement age from 67 to 70; (4) preserve the limited estate tax and dedicate it to social security; and (5) increase taxation of benefits. The other 3 are (1) adjust the COLA to reflect the true rate of inflation; (2) invest part of the social security trust und in securities; and (3) reduce benefits for future retirees.

In 1983, Congress enacted provisions intended to fix the problem for at least the following 75 years - note that is long past the time any of them would be affected or their seats at risk. The problem is, it id not work. My concern is that any proposed solution which puts more money into the hands of the Congress will not solve the problem but will only provide more money for them to buy our votes.

A reasonable solution would be to permit taxpayers on a voluntary basis to direct that their share of social security tax payments be directed into personal retirement accounts. That money would accumulate during their working lives and become a personal asset upon retirement. It would be paid out as an annuity and, at the election, of the employee, any amount in excess of the amount needed to purchase an annuity equal to social security, could become part of the individual's estate.

Let's think about this.