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Social inSecurity

September 23rd, 2006 at 09:17 am

Even though this topic applies to an older audience, this will be heavily debated subject in the next two decades. As a young man I know that this social program will probably be depleted by the time I retire, but most people my age that do not save for their retirement still believe the government will support them in the years they can no longer work.

According to USA Today, ďLast year, that rate sank to -0.5%. Households spent $41.6 billion more than they earned. The rateís last dip into negative territory was in 1933, when banks were closed and breadlines were long. In January, the savings rate fell further, to -0.7%.Ē This seems like a scary statement, but it draws a vivid picture of our future. How is the younger generation supposed to save when our parents spend more than what they make?

Another scary statistic is that the percentage of households putting money into their savings fell to 56.1% in 2004, down from 59.2% in 2001. It gives me shivers down my spine thinking about what long-term effects this will have on America. Unless this cycle is broken, and our generation starts to save, our country will be in financial ruin.

This program was created to help the retirees have financial benefits post retirement. The big problem is that the government did not predict some huge factors contributing to the downfall of the plan such as: women in the workplace lowering the birth rate (the biggest factor), men and woman living past the age of 60, inflation, and the rapid development of foreign countries. President Bush tried to put together a plan to reform Social Security that would update the program, but of course was shot down. This program MUST be reformed so that our generation of non-savers will still have a forced savings plan.

Even though I personally think the government should not have a huge role in our retirement, many people do. I also think that when you look at the program itself it looks like an illegal Pyramid Scheme. That is just my opinion. Read what the SEC describes as a pyramid scheme and then you cannot tell me there arenít any similarities between both programs. In conclusion, I think that we need to save for ourselves and hope others will catch on before they have to retire. Finish rich by early saving and let the wonder of compound interest take its course.

I will address how to save for retirement correctly in a future financial post.

3 Responses to “ Social inSecurity”

  1. LuckyRobin Says:

    Now there's a thought, social security as a giant Ponzi scam. My DH and I are 37 and 36. We have never believed social security will be there for us and we have been making contributions to 401K since the day DH qualified. If social security is there it is gravy but it should never, ever be counted on. And we will never, ever get back what we put in. We absolutely must take care of ourselves and the younger young people start, the better.

  2. pablo71 Says:

    I would disagree with your statement that "women in the workplace lowering the birth rate is the biggest factor". I would say it is abortion which has taken 1.37 million U.S. citizens out of the workforce each year since 1971 when it was legalized. Think about that for a minute - over 34,000,000 taxpayers gone. That my friend is the reason we are in the situation we are in, but the government would never admit that.

  3. JRBeaudry Says:

    I donít know about that one.... Look at every other country in the world. Type in population pyramids in Google and then look at America in 30 years and look at India. America (educated and developed) is going to be an inverted pyramid, while India (less educated and developing) is a perfect pyramid. 2nd Most abortion cases have actually lowered crime rates (Which is a good thing. Read it in Freakanomics), because most abortions happen in the lower income families. Lower income America doesnít put the most people in the workforce. Middle America does. You can relate "woman in the workforce" issue to every country. India (where it is illegal to have abortions) has lower birth rates in the North where most women are literate and work more. In the less educated Southern region of India population is extremely high. You canít argue stats. I understand your point, and it would be correct if Middle America was the ones getting all the abortions, but they arenít. Abortion does have some to do with it. But if Middle class America had at least 2 children per family Social Security could probably survive. But then again, I believe in privatizing and reforming the current plan so women should be able to do whatever they want.

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