Proposals to vary Social Stability Added benefits

Through lots of elections, we've read proposals from politicians to alter or improve Social Protection security company blackburn benefits. During this paper, I’m intending to investigate and evaluate these proposals to search out out if they would be effective to your Social Protection fund, the way it will impact all of us during the foreseeable future, as well as latest beneficiaries who acquire Social Stability.

“The vital dilemma for Social Safety is the fact, because the population ages, soon there'll not be more than enough persons paying Social Security taxes to supply benefits for every retired person.” (Dilulio & Wilson 486). This is why so lots of politicians have proposed changes to your latest system. The men and women in my generation might not see any positive aspects when it’s our time to retire. “In 1950, there were 16 workers to support every single one beneficiary of Social Stability; today, there are only 3.3 workers supporting every single Social Safety beneficiary.” (White House). If Social Stability stays unchanged at this rate, Social Stability will be paying out out more than it takes in. If we ever reach this stage we will be left with two problems, a lot of people today spending into the system now will be cut off of Social Security, or the government will borrow more money to pay the beneficiaries, which will increase the national debt.

“Unless otherwise stated, payment levels apply equally to aged, blind, and disabled persons.” (State assistance programs for SSI recipients, 3) I believe that if the Social Protection fund only funded beneficiaries who are aged, we would not have such a low number today of 3.3 workers supporting just about every Social Safety beneficiary. “The Budget Enforcement Act, for example, excluded the receipts and disbursements of Social Stability from the President’s budget along with the congressional budget resolution. Programs that have been excluded like this are called “off-budget”.” (Collender 12)

Robert M. Ball has proposed a plan to change Social Safety while arguing against President Bush’s proposal of private accounts. One thing that Ball has proposed was, “Gradually raise the cap on earnings covered by Social Security so that once again 90 percent of all such earnings could be taxed and counted for benefits” (Ball 2). I believe the means of using tax to fix Social Stability will work during the short run, but not inside the long. If we do take this approach, should we gradually raise the cap on earnings covered by Social Stability even more in the potential when Social Security has gone further into debt? Another proposed adjust by Ball was, “An estate tax is a highly progressive way of meeting this cost, and dedicating it to Social Security would strengthen the contributory.” (Ball 3) Now an estate tax, or sometimes called a “death tax”, is a tax on a person’s estate depending on how much he or she was worth. Again, I see a dilemma with this proposal because Ball is suggesting that we use another means of tax to be paid into Social Security. I personally think it’s wrong to even have an estate tax because those who are taxed an estate tax were most likely small business owners. “More than 70% of family businesses do not survive the second generation; 87% do not make it into the third generation.” (Frequently Asked Questions about the "Death Tax")

In the course of the 2000 elections, President Bush was widely known for his proposals to privatize Social Safety. Most of the Democrat’s are against Bush’s proposals to alter Social Protection, whereas, most Republican’s are for Bush’s proposals to vary Social Safety. In order to search out out no matter if persons could be better off under the existing Social Security system or a privatized system, I researched the average returns among the present system and compared them to your average returns under a private investment or “private account”.

Barbara Boxer published a “Social Protection to Social Insecurity calculator” (Boxer), that calculates the average return an individual will get under the present system compared to Bush’s privatization plan. I entered lots of different salaries and years and at just about every given circumstance, Bush’s plan resulted in a loss. I found this very disturbing considering the large amounts of research I have done last year on retirement accounts.

Dave Ramsey published a ”Privatizing Social Stability calculator” (Ramsey), that calculates the return you could expect depending on the type of fund you choose, your income, and your age. Compared to Barbara Boxer’s calculator, I found this calculator more accurate because you were able to choose a fund that had an average annual return, which is calculated into how much you contribute over a given amount of years. The result from Dave Ramsey’s calculator shows how much you will receive from social security and your private accounts when you retire which resulted in a much higher return than social security.

Last year I took an economics class, which covered a great deal in investing for retirement. Some people today who are against Bush’s plan of private accounts state that privatizing social stability is too risky for retirement. “For individual investors who have neither the time nor the inclusion to actively monitor a stock or a bong portfolio, mutual funds have an obvious appeal. Just pick a good fund and let the managers do the work for you.” (Groz 105). At the age of 19, I visited Fidelity Investments in Braintree, Massachusetts where I was able to start my own investment portfolio. They showed me quite a few funds that ranged from aggressive growth to conservative growth funds. I then chose a couple of mutual funds that were aggressive growth because I was starting my investing at such a young age. “Many investors draw the inference that they should not invest all their money in a single stock or bond, but rather spread out their investments among a group of securities.” (Groz 106). If private accounts were an option, I would recommend folks to diversify their investments into several different funds just to limit risk.

Another benefit from investing in certain types of stocks is the dividends. “Dividends, then, are a dividing up and distribution to shareholders of a portion of the corporation’s earnings.” (Groz 27). With these dividends, you can reinvest them into the stock or fund; “Compounding occurs when you get lots of (e.g., interest or dividends) from an investment and put it back into the portfolio, letting it grow alongside the original investment.” (Groz 183).

After doing researching and analyzing the proposals offered by several politicians, I feel that privatizing Social Stability is not such a bad idea. I feel that privatizing Social Protection would give men and women more control of their money when it comes to saving money for retirement that the government cannot touch. I understand that some people might fear the risks of investing within the stock market, but if someone diversifies and chooses funds that are somewhat conservative, there is a very small risk of having little return. Considering that Social Stability today has very little return “Social Security's inflation-adjusted rate of return is only 1.23 percent for an average household of two 30-year-old earners with children in which each parent made just under $26,000 in 1996.” (Beach), you will be better off putting your money into a savings account earning a return close to 3 percent.