I find that the majority of people echoing the mantra that Social Security will become bankrupt do not understand how the system works.
Essentially, the Social Security trust fund is like a savings account that is earning interest. It is this interest income that is used to pay out current benefits. If no changes are made, around the year 2042 or so, the interest income will no longer be sufficient to cover the cost of benefits.
Some bemoan the fact that the money in the trust fund has been borrowed for other purposes. While true, this is not relevant to the debate. The money you might have put in a savings account in the bank is not sitting in some dusty vault, but rather has been lent to others - at a higher interest rate than you are earning. Nevertheless, the money will be "there" when you decide to withdraw it.
Behind the smoke and mirrors, the "solutions" proposed by the Bush administration do little to fix the problem. Allowing diversion of money into private accounts is estimated to create a $1 trillion to $2 trillion shortfall in contributions to the trust fund. Borrowing that amount of money, so that current interest income can continue to pay the benefits, will drive higher the interest rates you pay on your mortgage, your car, etc.
A simple solution to the "crisis" is to remove the cap on Social Security contributions; currently only the first $90,000 in salary is subject to Social Security. I favor receiving a guaranteed fixed income reward from Social Security instead of having Wall Street interests receive the certainty of a guaranteed government reward if the Republicans can manage to create this windfall transfer of capital.
If you want a privatized account, open an IRA!
Diane K. Smith
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