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It’s time to re-think Social in-Security.


As seen in The Oakland Press
July 14, 2019

It’s time to re-think Social in-Security.

Just before the July Fourth holiday, I met with a long-time client who told me, that although he has known me for more than 25 years and reads all my articles, he doesn’t know my political leanings.

I took that as a compliment, because I never felt that my role as a financial advisor required promoting a political agenda. I indicated to him, and now to you, my readers, that I am neither red nor blue. Rather, my job is to help my clients with their green.

I will share that I believe far too many people are turning to the government to solve many of the problems and issues they face. In my mind, free markets driven by competition are capable of solving more problems than they create.  And regardless of your political inclination, the demographics of America are changing. We are becoming an aging population with longer life expectancies.

For years the Social Security trustees have warned that there soon won’t be enough money to sustain the system. The money coming in will not be sufficient to cover the amount that’s promised to Social Security recipients.

Several solutions have been bandied about, including pushing back the date one can collect benefits, increasing the Social Security tax rate, or raising the maximum cap on income. I think it may time to think outside of the box.

We aren’t the only nation with an aging population and shrinking workforce. Other nations with the same circumstances have come up with some programs I think are worth considering before we simply expand the existing Social Security program.

The internationally known and respected Melbourne Mercer Global Pension Index ranked the stability of the public retirement programs of 34 countries. The USA ranked a disappointing 19. If our own Social Security system is ranked that low and the trustees agree that something needs to be done, changes should be made sooner rather than later.

I find it particularly ironic, especially in this election cycle, that  Socialism is frequently mentioned as a solution. The irony is that many of the Socialist leaning nations ranked ahead of us have implemented Capitalistic ideas to solve their retirement issues.

For example, Sweden reformed their public pension program in 1998.Citizens must invest a minimum of 2.5 percent of their income into privately held managed accounts, somewhat similar to our IRAs. What’s more, the trustees can actually make investments with the funds.

The Dutch equivalent to our Social Security pays out less than our average, but whether you work for a large or small employer, you must choose from a defined menu of retirement accounts. Fortunately, they are portable from job to job.

Australia is also ranked ahead of us. The public part of their program is a safety net for the truly needy. All employees and employers are actually required to set aside a portion of their income, which is then invested in special private sector funds. Current value is about $2 trillion, not bad for a country of 25 million. Australia’s program has been called the envy of the world.

It’s not a matter of politics. It’s common sense. Before we sink any more of our hard-earned money into the existing program, Social Security should consider some alternatives that interface with the private sector.