Confidence in our Congressional leaders is at an all-time low and falling - why? A $16-trillion national debt, involvement in wars we cannot win - and even if we did win, there is no financial gain for the average American? In other words, who is going to pay us back for money spent and American lives lost? Unemployment is high and those who are facing financial ruin tend to blame others - our Congress is a likely suspect!
I think the most incredible barrier to common sense occurred when the recent Congress (and the President) decided it was "smart" to reduce employee contributions to social security by 2% when they knew it was already financially troubled, but no worry funds are taken from the General Fund to make up for this 2% loss; in other words, this portion of social security is still being paid but from other national taxes. So that person making $10 per hour ($400 per week) ends up with a massive $8.00 more to spend - hardly enough to impact the national economy! But that person making $175,000 per year (like our Congressman) would benefit by $291 per month; hence, this tax cut actually benefits those who do not need the extra money.
There are those in Congress who propose cuts in Medicare and Social Security benefits - why not? After all, the aged and afflicted paid into this fund believing they would get some form of benefits upon retirement; therefore, they should be penalized for their stupidity! We know our National leadership looked longingly at the surplus funds building up in the Social Security "entitlement" and simply had to have those funds - offering an interest bearing note in its place - and now, when there are no funds left to take, it is time to take away the benefits - after all, these are old folks - their productive time is past. Possibly, the government could simply send out a revolver so that these "old folks" could end it all and save us from all that expense!
If my Congress really wanted to solve unemployment, they must look at employee costs and the various benefit packages that make American workers too expensive to have around. Part of that problem is the thousands of different retirement systems through-out the country offering a way to "game" the system by obtaining several different retirements for incredible benefits. But, many of the public retirement programs are in serious trouble with CalPERS being a prime example. The real solution is to have only one retirement system for everyone based upon what each contributor pays into the system.
Social security, as the sole retirement system, is a solution so fundamental and basic that even the most illiterate person can comprehend it! If we could eliminate government interference and the practice of taking excess funds from the Social Security Trust Fund and allow the 12.4% OASDI contributions to accumulate interest in behalf of each contributor, there would accumulate sufficient interest income from these deposits to offer retirement at the end of thirty years. This is a simplified program for retirement - you get out of it what you pay into it!
For example (ignoring the current reduction in employee contribution of 2%) someone who averages at least $40,000. per year and his investment with social security draws 5.5% interest would have, at the end of 30 years - including compounded interest - a retirement principal of $379,463.90 and draw annual interest of $20,870.52 or $1,740. per month. Obviously, those who earn more would get a greater return. As retirees die off, their investment principal would still be generating income which would augment the Trust Fund so that eventually, Social Security could indeed pay everyone, at retirement, an income based on what they actually paid in. Eventually this fund would generate excessive reserves which might be available to assist in Medicare expenses. It should be noted the 5.5% interest proposed here would be through "secured" investments such as real estate (not the stock market gambling idea).
The point is that everyone wants security when they retire, and we know American labor is driving business out of the country. Why not attempt to reduce these costs and save our retirement system at the same time?????
For those interested I have an actual interest schedule attached:
Social Security Table
Investments @ 5.5% Return
Average income of $40,000.00 per year
Employee withholding OASDI = 12.4 % (Medicare 2.9 ignored)
Employee/employer contributions = $4,960.00 per year.
Administrative costs 1% = $ 49.60 per participant
Balance to be invested: $ 4,910.40 @ 5.5% annual return - compounded.
Year amount incl. interest
0 $ 4,910.40 + 270.00
1 5,180.48 + 4,910.40 + int.
2 10,645.88
3 16,411.88
4 22,495.01
5 28,912.71
6 35,683.39
7 42,826.45
8 50,362.38
9 58,312.79
10 68,139.09
11 77,073.02
12 86,492.51
13 96,430.07
14 106,914.20
15 117,974.96
16 129,644.06
17 141,954.96
18 154,942.96
19 168,645.30
20 183,101.27
21 198,352.32
22 214,442.17
23 231,416.97
24 249,325.38
25 268,218.75
26 288,151.26 If Interest only
27 309,180.06 after 30 years. * this column is for possible stop in payments to allow
28 331,365.44 the interest to continue to accumulate for ten more years.
29 354,771.02 Amount + Interest only*
30 379.463.90 379,463.90 + 20,870.52 OR $1,740./per month
31 405,514.80 400,334.42 + 22,018.40
32 432,998.68 422,352.82 + 23,229.41
33 461,994.08 445,582.23 + 24,507.03
34 492,584.23 470,089.26 + 25,854.91
35 524,856.84 495,944.17 + 27.276.93
36 558,904.44 523,221.10 + 28,777.16
37 594,824.66 551,998.26 + 30,359.91
38 632,720.49 582,358.17 + 32,029.70
39 672,700.59 614,387.87 + 33,791.39
40 714,879.60 648,179.21 + 35,649.86 = 37,665.60 Int. Beginning year 41
Annual Int. @ 5.5% = 39,318.38 or $3,138.80/month
Or $3,276.54/month