Tough medicine needed for Social Security

The nonpartisan Congressional Budget Office announced Federal debt could match GDP in 25 years. In large part, this is due to the continuation of large increases in costs for “entitlement” programs.  Without cuts to those programs or increases to revenues (i.e. taxes), the fiscal stability of the US economy is in jeopardy. It is time to take some bad medicine.  It is time for Congress and the White House to issue an apology to everyone under the age of 40 (which includes this writer).

Social Security is not an entitlement.  It is a Depression Era promise the US Government made to its citizens; we will not allow Americans fall to the wayside.  It was written in a time with unemployment rates never seen before, or since; rampant poverty; and where each successive generation was not only larger, but also outlived the previous. But, look at the title Social SECURITY; not Social PENSION, Social RETIREMENT PLAN or Social THE GOVERNMENT WILL TAKE CARE OF YOU UNTIL YOU DIE. The intent was never as the plan has largely been implemented.

Today’s demographics cannot support a top heavy system with a larger population receiving outlays than the ones making contributions; especially when the population receiving outlays has life expectancies far greater than when the law was written. An annuity basic: the longer the annuity has to pay the larger the principal OR installment payments (i.e. taxes).  Because of this, when I was a financial planner, contrary to my training which taught building a retirement plan depended on employer plans (pension or 401k), personal investment and Social Security, I advised clients to depend only on employer plans and personal investment.

I, with many of my Generation X, Y and Millennial brethren, have no expectation we can rely on Social Security in our golden years.  It is time to make the necessary changes, write the apology and tell these generations not to plan on having it.  The key word is plan. This is not a call to repeal Social Security.  The program itself needs to exist for SECURITY.  However, lines need to be drawn, and adhered to, on total wealth.  It is absurd to think Warren Buffett receives a Social Security check.  More absurd is to continue to allow $1.3 Billion in mis-payments.  Increased funding for technology and personnel to verify enrollment, claims and payments will save tenfold the cost.  These are simple, common sense changes that can save the Social Security system as a whole, and will directly contribute to stabilizing the US economy.

For those in these generations that contend it is not fair to continuing paying into a system they are not guaranteed to receive a benefit from, the payment will come either way.  Rather to plan my own retirement and pay into Social Security at a decreasing amount over the next 20 years, then continual increases to the general tax rate which in the end would strip away a much greater amount from my weekly check.  The total cost in increased tax revenue and extra costs associated with economic instability will be far, far greater.

*Matthew R. Jewell: Currently a Contracts Manager for a large organization; former financial planner and holder of Series 6 & 63 Securities, Life and Health Insurance Licenses; Bachelor's Degrees in Mathematics and Economics from the University of Detroit Mercy and Master's of Business Administration from Wayne State University