July 6, 2011 -
I had some recent discussions with some colleagues about various political topics and eventually broached the topic of Social Security of how noble, yet self-destructing idea it was. We talked about how stupid is was the government was losing money in it and at this point, people probably were better off demanding to cash out and do something else with their portion paid into the system. I realized for those already within 15-20 years of retirement, their already too deep with Social Security to get out for the most part.
I discussed my possible solution to the problem. In essence, Social Security is everybody's money pooled together and reinvested in government bonds; however, I proposed that saving for retirement should be performed at the state level with federal guidelines. I continued that the money shouldn't be pooled and that it really should be a mandatory retirement savings account opened in a financial institution of your choice at the time of gaining employment (or at birth if your parents decide to contribute early like a college fund) that is taxable income. By law, a guideline of minimum amount of one's paycheck should be funneled into the account, for example, 3% of your paycheck checked in on a modified W4, enforced by your employer, verified by the IRS. Of course, one could ultimately adjust the percentage funneled to a higher amount.
With proper education and training, one savvy enough could then be granted to take a small percentage (say 10% to being with between the ages 18-21) to invest into common stock, bonds, forex, or mutual funds to speed up their account rate of return. When I mean proper education, I mean the use of having a finance class in high school, coupled with playing with fantasy stock exchange, reading up Benjamin Gramham, and investing websites like investopedia.com. These savvy people would be informed that their investment is not without risk and subject to losses.
In conclusion, being fair is a fairy tale idea. The idea that people need to be baby sat to have money for retirement is stupid, but since many are... unfortunately, I like what I planned better than Social Security. At least I know what I make now, some of it I'm saving for later, plus I can invest portions of it to increase that rate of return.
Thoughts?
I had some recent discussions with some colleagues about various political topics and eventually broached the topic of Social Security of how noble, yet self-destructing idea it was. We talked about how stupid is was the government was losing money in it and at this point, people probably were better off demanding to cash out and do something else with their portion paid into the system. I realized for those already within 15-20 years of retirement, their already too deep with Social Security to get out for the most part.
I discussed my possible solution to the problem. In essence, Social Security is everybody's money pooled together and reinvested in government bonds; however, I proposed that saving for retirement should be performed at the state level with federal guidelines. I continued that the money shouldn't be pooled and that it really should be a mandatory retirement savings account opened in a financial institution of your choice at the time of gaining employment (or at birth if your parents decide to contribute early like a college fund) that is taxable income. By law, a guideline of minimum amount of one's paycheck should be funneled into the account, for example, 3% of your paycheck checked in on a modified W4, enforced by your employer, verified by the IRS. Of course, one could ultimately adjust the percentage funneled to a higher amount.
With proper education and training, one savvy enough could then be granted to take a small percentage (say 10% to being with between the ages 18-21) to invest into common stock, bonds, forex, or mutual funds to speed up their account rate of return. When I mean proper education, I mean the use of having a finance class in high school, coupled with playing with fantasy stock exchange, reading up Benjamin Gramham, and investing websites like investopedia.com. These savvy people would be informed that their investment is not without risk and subject to losses.
In conclusion, being fair is a fairy tale idea. The idea that people need to be baby sat to have money for retirement is stupid, but since many are... unfortunately, I like what I planned better than Social Security. At least I know what I make now, some of it I'm saving for later, plus I can invest portions of it to increase that rate of return.
Thoughts?
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