Social Security

Demands of a new position, accompanied by four hours a day commuting and a two weeks of traveling per month, have kept me away from my musings. For this I apologize. The latest news on the Social Security front is compelling enough to squeeze out some time in my new nightmarish schedule to at least confront the "goings on" in the Bush administration relative to this venerable social institution.

First, a little background: Social Security was created by FDR in 1934. It came about as a mechanism to protect all of us from financial uncertanities associated with death, disability and old age. It was concieved as a recognition that the "Farm" no longer was the predominant "protector" (or fallback) in American Life. So, in part, it is a program that recognizes America's passing from an agrarian society to an industrial one...one where we own or, are not a participant, in anything that has any leverage potential long term (such as a farm would have). Social Security is probably the biggest social contract ever enacted and it was put in place by people who lived amongst the worst despair experienced by our society....ever.

Perhaps, like modern Germans, we have, as Stephen King puts it, "forgotton the face or our fathers". Those who are not in jeopardy of suffering due to old age, disability etc. and that no longer can see into the past, would not necessarily see Social Security as a particularly troubling issue. For all of you who side with Mr. Bush and are facing the prospect of either not being able to retire or retireing with little more than the income from Social Security, you have reaped your reward. If you are "middle aged" I suspect you will be hit hardest by what's about to take place. If you are amongst the very young, then perhaps you will grow old only with the fear of your future to depend on since its likely that you may never know of the program that was designed to provide you with at least a fall back to poorly performing markets or the overburdening demands of raising and educating your children. Hopefully, you will not be one of the countless millions that are toiling to keep our small businesses afloat.

So, what's to be done? First, I think we all have to acknowledge two very gremane facts: People are living longer and the baby boomers (the largest single population explosion in our history) are preparing to retire. One thing I think its important to remember from a historical perspective is that the Baby Boom is a temporal anomoly that will, with time, alleviate itself. No one seems to talk about this. What does it mean? Personally, I think it means that whatever we have to do shouldn't last any longer than the fifteen years (plus compensating years for living longer) or so where the number of Social Security drawers are actually drawing benefits. I'm pretty sure that we've been compensating all along for people living, and thus working, longer so I don't see this as a particular issue.

I think it obvious that the FICA limit contributions (whatever the ceiling max is now) is going to have to go away and all of our income is going to have be subject to withholdings. Second, the income from other sources, during the baby boom glut, will have to be considered when calculating SS benefits. By this I mean that, when mandatory draws from retirement accounts are triggered, the income from these draws will have to be considered as "offsets" to social security draws. For example, If I'm one of the lucky ones who, at age 67, has to draw so much from my retirement accounts that I'm pulling say $100K per year out of the accounts, maybe your social security benefit would be reduced by 50% until something changes. This would slow the payouts in any given year but it certainly won't fix everything. Last, we just may have to up the rate. It will be the price we pay for the 7-eleven down the street, the employees that maintain our small towns and the landscapers that keep our yards prim and proper looking at prices we can seemingly manage.