Saving Social Security With Personal Retirement Accounts: The Wave Of The Future

November 29, 2001
Omni Shoreham Hotel 12:00pm

Statement by 60 Plus Association President Jim Martin

Washington, D.C. — This is an exciting time not only for seniors but just as importantly for our children and grandchildren for they will benefit in the future from a new and improved Social Security system that will result from these options offered today by the bipartisan Commission to Strengthen Social Security.

President Bush tasked the Commission with the responsibility to see that current and near retirees’ benefits are preserved, while allowing young workers to take more control of their own financial destiny with personal retirement accounts (PRA’s).

And in the words of Commission Co-Chairman, former Democratic New York Senator Daniel Patrick Moynihan, the new system, once it’s in place, will allow for ‘wealth creation’ by lower income workers.

And to those nay sayers, the status quo seekers who take the head in the sand approach, we say shame on you. The system is going broke and they know it, and yet they offer no plan of their own to save it. We say no plan, no palaver. You ‘do nothing’ for seniors by this ‘do nothing’ approach.

While the current ‘pay as you go’ system worked well for more than 40 years, the shifting demographics have put it on a collision course with reality.

It started in 1935 with a 2% tax on $3000 income, a mere $60 per year, paid by some 40 workers to support each retiree. However, since seniors, as it has been indelicately described, ‘conveniently died’ at about 65, there was no real financial strain, thus no need, to increase the 2% tax.

But fast forward to today, and the tax is 12.4% on up to $80,400, extracting as much as a whopping $9,969.60 from each worker. But instead of 40 wage earners paying that amount an average of only three provide these revenues because of the dramatic drop in the birth rate. That amount would be enough if we seniors still ‘conveniently died’ at about age 65.

Seniors are now living well into their 70’s 80’s and 90’s and beyond. My favorite senior, my mom, is in her mid-80’s and my second favorite senior, my stepfather was born in the 19th century, lived through the 20th century and this September, celebrated his 102nd birthday in the 21st century. I call him a tri-centurion even though there is no such word.

In a nutshell, that causes today’s financial strain on the system, living longer but with fewer workers paying into the program.

20 years ago, Dr. Jose Pinera fathered the current program in Chile which allows fund managers to invest a portion of their taxes in the name of individual workers, a program which more than 90% have voluntarily joined.

More than a dozen countries in South America, Europe, and Asia have adopted, or are in the process of adopting, a Chilean-style plan. Even socialist Sweden is going that route and communist China, too.

60 Plus says it’s long past time for the U.S. to follow suit and move into the 21st century. Let’s stop scaring seniors for political gain. If seniors are assured that Social Security is there for them, they’ll be the first to say ‘let’s roll up our sleeves and fix the system for future retirees, our children and grandchildren!’

When I first came to Washington in 1962 as a young newspaper reporter, John F. Kennedy was in the White House (and I covered his tragic assassination, November 22, 1963), Neil Armstrong had yet to walk on the moon, Strom Thurmond was still a Democrat and only Barry Goldwater seemed to perceive the looming crisis facing Social Security.

The Arizona Senator was 30 years ahead of his time and now responsible members of Congress on both sides of the aisle are working to craft a plan to save Social Security for the future.

President George W. Bush is the very first White House occupant ever to have the courage to take this issue head-on.

He refused the ‘head in the sand, there’s no problem’ approach, and he’s fulfilling his campaign promise to work to save Social Security for future generations. Senior citizens applaud the President for having the courage of his convictions.