Wednesday, March 16, 2005
Two More Views on SS Reform
In this OpinionJournal article, a 30-ish WSJ editor reflects on his annual SSA report letter and arrives at an interesting perspective. " Looking over the letter, however, it became clear that there is a fundamental flaw in the arrangement. Although, I've already paid enough into the system to 'qualify' for benefits, not a penny of that money is likely to be counted in determining the size of my retirement benefits. What's more, whatever I pay over the next two years probably won't count either. The problem here is that I am only 30 years old. Social Security counts only a worker's top 35 wage-earning years when determining benefits. And since the government considers 67 to be my 'full retirement age,' assuming a steady climb of income, I'm still two years away from starting to accrue the credit that will determine the size of my monthly Social Security check. In other words, the system is exactly the inverse of what we've all been told to do in planning for our retirement. Those who work hard and put money into the system early in life, get the same as those who start paying in later on. And as a proportion of what they've paid in, the early-contributing ants actually get less than their grasshopper peers."
He makes a good case that many workers ( particularly low-end ones) get no consideration for their early work and contributions by the existing benefit formula. He feels "This all stacks up in favor of reform because private accounts are the only thing that can bring some equity to the system." An interesting view on why personal accounts are attractive to younger workers.
Another congressional hearing and Greenspan again urges Social Security changes: "Congress must encourage people to save more if it wants to ensure a secure retirement for baby boomers and also must put Social Security on a clear financial path by early 2008, Federal Reserve Board Chairman Alan Greenspan said Tuesday. "That is really the only thing we can do which can counter the demographics over which we have no control," Greenspan told the Senate Special Committee on Aging, chaired by Sen. Gordon Smith, R-Ore." Greenspan again " offered his qualified support Tuesday for a system of private accounts, saying they are perhaps the best way to shield savings from a spendthrift Congress." Increasing the nation's personal saving rate as a key ingedient for economic growth is a consistent theme with Greenspan.
Individual SS accounts do that, providing real "lockboxes" and letting people accumulate wealth. The young editor and the senior advisor seem to have found common ground there.
He makes a good case that many workers ( particularly low-end ones) get no consideration for their early work and contributions by the existing benefit formula. He feels "This all stacks up in favor of reform because private accounts are the only thing that can bring some equity to the system." An interesting view on why personal accounts are attractive to younger workers.
Another congressional hearing and Greenspan again urges Social Security changes: "Congress must encourage people to save more if it wants to ensure a secure retirement for baby boomers and also must put Social Security on a clear financial path by early 2008, Federal Reserve Board Chairman Alan Greenspan said Tuesday. "That is really the only thing we can do which can counter the demographics over which we have no control," Greenspan told the Senate Special Committee on Aging, chaired by Sen. Gordon Smith, R-Ore." Greenspan again " offered his qualified support Tuesday for a system of private accounts, saying they are perhaps the best way to shield savings from a spendthrift Congress." Increasing the nation's personal saving rate as a key ingedient for economic growth is a consistent theme with Greenspan.
Individual SS accounts do that, providing real "lockboxes" and letting people accumulate wealth. The young editor and the senior advisor seem to have found common ground there.
