Representing North Carolina’s Ninth District                                                                        

Securing the Future of Social Security

I'm sure you have heard many things about Social Security reform and what it will mean for you.  Social Security was created 70 years ago in a very different era.  The program has served a great purpose by providing millions of seniors with retirement security.  However, the 21st century has brought forth new challenges the creators of Social Security could not have foreseen.

In the 1940's, there were 41 workers paying into Social Security for every one retiree.  Today there are only three workers per retiree.  In 13 years, more people will be collecting social security checks than will be paying into the program.    

In the 1930’s, life expectancy for a newborn was 57.  Today it’s close to 80.  More Americans are living longer and are collecting more benefits as a result.

Today, younger workers pay Social Security taxes to support their parents and grandparents, but have no faith that they will receive benefits that will help them during their retirement.  If you do the math, it is hard to argue with them.  The problems we face will cause it to be insolvent in about three decades.  For the tens of millions of Americans who depend on Social Security, this is simply unacceptable.

The only way to permanently fix Social Security’s problems, and provide younger workers with Social Security checks large enough to actually help them during their retirement, is to create voluntary Personal Retirement Accounts (PRAs). 

First, let me say that Seniors shouldn’t worry about Social Security reform.  Your benefits will not change.  Do not listen to scare tactics.  You will not be affected, and neither will those about to retire.  This debate is about ensuring younger workers will have the same retirement security you enjoy.

PRAs allow younger workers to place a portion of their Social Security taxes into their OWN social security account.  Then, they can manage it, build a nest egg for their future, and pass it on to their children or grandchildren if they choose. 

Those who do not want to participate in PRAs do not have to.  It would be totally voluntary.  No one should be required to open a personal account, and no one should be denied that right.

Currently, workers pay into an empty Social Security fund.  Washington takes Social Security taxes, pays benefits to current retirees, and spends the excess money on other programs.  That’s right—Washington takes YOUR retirement money and spends it!  PRAs ensure that taxes paid into Social Security are owned by an individual and are only used for Social Security. 

PRAs also enable workers to get a higher return on their retirement funds.  For example, if a 25-year-old invested $1,000 per year over 40 years at Social Security's 2 percent rate of return, in 40 years she would have over $61,000. But if the money was invested in the stock market, and earned its lowest historical rate of return, she would earn around $160,000. If she earned the average historical stock market rate of return, she would have more than $225,000.  That’s nearly four times the amount expected from Social Security.  And PRAs ensure that you own that money, and no bureaucrat can touch it.

Many are concerned that PRAs might be “risky.”  I disagree.  I don’t see how it is risky to take money from Washington and give it back to individuals who want to control their own money.  Remember, Washington got us into this mess in the first place!  The fact is that the investment plan for PRAs is actually modeled after the Thrift Savings Plan; the same retirement plan members of Congress and federal employees use. 

This plan allows federal workers to manage their own retirement accounts and decide where they want to invest their retirement money based upon different investment options.  Their choices include a mix of stocks, bonds, money market funds, and government securities.  The system is set up to spread the risk among safe options, and is closely monitored.  This system has worked for many years, and these accounts have given a higher rate of return than any government fund can give.

Others say that transition costs of $1 to $2 trillion dollars would be too high.  But the cost of inaction is much higher.  Each year we do nothing, we add a $600 Billion price tag to fixing Social Security.  In several decades the bill will add up to $10 to $11 Trillion dollars; a cost that is nearly twice the combined wages and salaries of every single working American last year.  So our choice is to fix it now or leave the problem, and the huge financial burden, on a future generation.     

Personal Retirement Accounts empower the individual and ease dependence on the government.  PRAs give individuals higher rates of return for their retirement, offer more flexibility, and can be passed down to future generations like inheritance.  More importantly, PRAs ensure that my grandkids, and yours, can retire with peace of mind; knowing that they actually own their retirement funds.   

Remember, it’s your money.  It’s your future.  Isn’t it time Washington allowed you to chose how you can spend your OWN retirement funds?  

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