COLUMN: Social insecurity? Solutions mean difficult choices
www.waltonsun.com
June 06, 2010 8:00 AM
Buz Livingston, Just Plain Talk
Once upon a time Rand Paul, the jerry-curled, Tea Party darling, and I shared similar views regarding Social Security ? then I got smart.
Actually, I realized that I was wrong; of course, there is a big difference. Social Security is often vilified but that monthly income stream is beneficial as it multiplies through our local economy. Being a retirement destination, Social Security dollars are logically important. With our economic engine tethered to tourists, do not overlook the Social Security beneficiaries who vacation on our still-pristine shores.
Social Security is a government program that works, albeit there are some workers who lose.
If you die prematurely, you lose. Often small business employers, since they are matching dollar for dollar their worker?s Social Security contributions, come up short. For most workers Social Security is a fair arrangement. The lifetime income stream generated from Social Security and independent of stock market fluctuations is woefully underappreciated.
However, there are two structural problems with Social Security: A.) Folks are living longer B.) Politicians have used Social Security to buy votes.
Eliminate the Social Security shortfall, Dr. Paul argues, by hiking the Normal Retirement Age to 70. Less than two years ago, I felt the same way. The projections look quite rosy if this is your solution. H.L Mencken said it best, ?For every complex problem there is an answer that is clear, simple, and wrong.?
Information workers, like me, can work until 70 or retire earlier if they like. However many people cannot physically work that long, their bodies will not take it any longer. Once that hit me, my arrogance embarrassed me. It was like scales being lifted from my eyes. Few factory workers, retail salespeople, heavy equipment operators or construction workers can stay on their jobs that long.
Dr. Paul should re-examine his proposal unless he has something else in mind. When politicians tout the benefits of raising the Normal Retirement Age, color me skeptical.
Under his proposal, current beneficiaries will feel no pain. In effect, any politician who promotes this solution is lobbying for votes. Older people vote in higher percentages than their younger counterparts do.
In addition, it is disingenuous to suggest that shifting the entire burden of solving the Social Security funding dilemma to current workers is in any way fair. Social Security could be in the black if the annual cost-of-living adjustment was tempered along with the way benefits are calculated.
These changes should be moderated for retirees with lower lifetime earnings (and lower benefits).
OK, raise the retirement age but not drastically like Dr. Paul recommends (age 68, instead of 70) and do it slowly over a period of several decades.
This solution will alienate everyone to some extent so it is unlikely any politician will follow through, but the time for pithy sound bites is over. For more information on Social Security funding solutions visit www.nap.edu for a free pdf version of Choosing The Nation?s Fiscal Future.
Dr. Paul does not do eye surgery with a meat cleaver but his heavy-handed approach to Social Security is equally inappropriate for current workers.
Bottom-line: Dr. Paul is proposing lowering benefits, a resolution that does not sound the same as raising taxes but it rhymes.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.
www.waltonsun.com
June 06, 2010 8:00 AM
Buz Livingston, Just Plain Talk
Once upon a time Rand Paul, the jerry-curled, Tea Party darling, and I shared similar views regarding Social Security ? then I got smart.
Actually, I realized that I was wrong; of course, there is a big difference. Social Security is often vilified but that monthly income stream is beneficial as it multiplies through our local economy. Being a retirement destination, Social Security dollars are logically important. With our economic engine tethered to tourists, do not overlook the Social Security beneficiaries who vacation on our still-pristine shores.
Social Security is a government program that works, albeit there are some workers who lose.
If you die prematurely, you lose. Often small business employers, since they are matching dollar for dollar their worker?s Social Security contributions, come up short. For most workers Social Security is a fair arrangement. The lifetime income stream generated from Social Security and independent of stock market fluctuations is woefully underappreciated.
However, there are two structural problems with Social Security: A.) Folks are living longer B.) Politicians have used Social Security to buy votes.
Eliminate the Social Security shortfall, Dr. Paul argues, by hiking the Normal Retirement Age to 70. Less than two years ago, I felt the same way. The projections look quite rosy if this is your solution. H.L Mencken said it best, ?For every complex problem there is an answer that is clear, simple, and wrong.?
Information workers, like me, can work until 70 or retire earlier if they like. However many people cannot physically work that long, their bodies will not take it any longer. Once that hit me, my arrogance embarrassed me. It was like scales being lifted from my eyes. Few factory workers, retail salespeople, heavy equipment operators or construction workers can stay on their jobs that long.
Dr. Paul should re-examine his proposal unless he has something else in mind. When politicians tout the benefits of raising the Normal Retirement Age, color me skeptical.
Under his proposal, current beneficiaries will feel no pain. In effect, any politician who promotes this solution is lobbying for votes. Older people vote in higher percentages than their younger counterparts do.
In addition, it is disingenuous to suggest that shifting the entire burden of solving the Social Security funding dilemma to current workers is in any way fair. Social Security could be in the black if the annual cost-of-living adjustment was tempered along with the way benefits are calculated.
These changes should be moderated for retirees with lower lifetime earnings (and lower benefits).
OK, raise the retirement age but not drastically like Dr. Paul recommends (age 68, instead of 70) and do it slowly over a period of several decades.
This solution will alienate everyone to some extent so it is unlikely any politician will follow through, but the time for pithy sound bites is over. For more information on Social Security funding solutions visit www.nap.edu for a free pdf version of Choosing The Nation?s Fiscal Future.
Dr. Paul does not do eye surgery with a meat cleaver but his heavy-handed approach to Social Security is equally inappropriate for current workers.
Bottom-line: Dr. Paul is proposing lowering benefits, a resolution that does not sound the same as raising taxes but it rhymes.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.