Students should take more interest in Social Security
April 25, 2005 —
"I don't know too much about it," says Amy Parcels, a 20-year-old junior here at SVSU studying communications. This is the feeling around campus and the reaction to the many questions dealing with Social Security. People and mainly students are not informed and don't really care about what is going on in our government. This issue was under fire about a month ago but it is still in the works, on the back burner waiting for an opportune time to bounce back.
Many have heard of this Social Security change, President George W. Bush's new plan, privatizing, and such other key terms used today in the news.
Most of the older crowd (40-50) has taken an interest in what all this means, mainly because it will affect them sooner but as the ages fall the interest is far less that what should be expected.
College students are very far from retirement or even thinking about what we will live on when that glorious retirement day comes, but if ever we should think about the future it might be this change that is going on right now. "All I know is that we aren't going to have Social Security when we get older," says Cassie Johnson, 21, a junior studying nursing. We must make sense of it in order to have an opinion.
Social Security began around 70 years ago under President Franklin D. Roosevelt in 1935. Social Security was designed to be a primary source of retirement income but not the only provider of income. This means that one should look for other sources of income after retirement. It also helps disabled and dependent spouses and children. These are the main benefits of the Social Security program.
Social Security is a forced government retirement plan to help people. Many people think that when they see the government taking money from their check that it goes into an account with their name on it. This is not the case. All of the money taken from your check for Social Security essentially goes into a government account. This money has nothing to do with the stock market or any kind of private (real) trust funds. The difference between Social Security trust funds and real trust funds is that private funds are invested into stocks, bonds, etc. with a certain amount of money and a certain amount of risk for loss or gain of money. Social Security trust funds consist of Old Age and Survivors Insurance (OASI) and Disability Insurance (DI). A better word for the government Social Security trust funds is Social Security IOU's, because there are no actual "funds." It is an insurance plan. These "funds" are the promises, the benefits that the government makes to retirees. The money taken from your check for Social Security for all practical purposes goes to the government; they can spend it on whatever they find useful or save it for that matter. In turn, they promise to compensate you when you retire.
"I know that Social Security is failing and that it isn't going to be there," Parcels continues. This is the impression we have been given. In theory, this system will work at least until 2042, when it will then become too difficult to support the retired community monetarily. This is in part because of the fertility rate decreasing and the average lifespan increasing. People live a lot longer and have fewer children, so the actual number of people working in the field will be much less than the people in retirement. These assumptions are based on if Social Security continues that way it does. The key word there is assumptions. It is not that Social Security is failing, but there are some reforms that possibly need to be taken care of.
What President Bush basically wants to do is lean more funds, not all, toward privatization or real trust funds. This would put your money into the stock market or bonds with the risk of more or possibly less profit. You do, however, get more freedom over your own money. This a point Bush is stressing. This is the gamble people are talking about. Those who know how the stock market works are at an advantage here.
The change in the Social Security can have a wide array of implications. For example, Professor of History Thomas Renna believes, "The President's plan to privatize Social Security would, in my opinion, greatly increase the size of the deficit and actually reduce benefits. The proposal's predictions of high returns on stocks after inflation are wildly overstated. More to the point, the plan's real purpose is to phase out Social Security altogether, something President Bush's advisors have been saying for years. Social Security is not Sitting Bull's casino, where one can gamble on one's savings. There are many better ways to ensure solvency than personal accounts, such as increasing the retirement age, increasing the payroll-tax cap, tapping general revenues, and means-testing payments for richer Americans."
It is important to take notice to this issue because for younger generations it will affect the future more drastically than we can think. A lot of people haven't been following it.
It is important as young adults to be aware of what the government is doing and wants to do with your money.