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When the presidents committee on how to solve the debt problem makes their report in December one of the problems that will be discussed in social security but it will be used by both sides to scare people. One of the many things wrong with out present system is how it discriminates against certain groups and here is just one example.



THE CASE FOR PRIVATIZING SOCIAL SECURITY



Social security takes in about $800 billion per year. It can be privatized over a 20 year period at 5% per year at a cost of $16B the first year and rises each year after. Currently we pay 6.2% of our wages into social security and our employer matches that amount. Social security has three parts. First, the retirement fund, second survivor benefits and third benefits for the disabled. 2.2% must remain as is to cover the survivors and disabled but the remaining 4% can be transferred to private accounts over the 20 year time period.

A person who averaged $30,000 per year in salary over the past 45 years would have contributed 4 percent into his social security account and his employer would have added another similar amount. If they had earned 3% interest they would have about $225,000 in their account at age 65. This person would be eligible for $15,000 per year in social security benefits or enough to last 15 years not counting any interest earned on the remaining balance.

What this means is, under the current system black males are supporting white females since white females have a life expectancy of 81 and black males of 70. A black male that retires will collect five years at $15,000 per year or $75,000 and the remainder of his social security or $150,000 will be used to pay for white females who will collect 17 years at $15,000 per year or $255,000.

If we were on the private investment plan this $150,000 left over from the black male could be passed on to his children and in a relatively short time there would be a large transfer of wealth to poor people.

The point here is that black leaders like Jesse Jackson oppose the private option and I don’t believe that most black males realize how this effects their retirement.

One wonders about the motives of these leaders.

Federal employees have had such a system for many years and they are very satisfied. There are five investment accounts in which they can invest. If we changed the present social security system to private accounts there would be a large influx of cash into the stock market, which would provide money for investment in new business and expanding business.

In 20 years the system would be privatized and allow the government to direct its efforts to other endeavors.