Proposals To Alter Social Stability Advantages

Izvor: KiWi

Through many elections, we have read proposals from politicians to alter or change web site Stability positive aspects. Within this paper, I’m gonna analysis and assess these proposals to locate out if they might be advantageous to your Social Protection fund, how it will influence all of us in the future, and the latest beneficiaries who get Social Protection.

“The critical issue for Social Stability is, because the inhabitants ages, quickly there'll not be adequate individuals paying Social Stability taxes to offer advantages for each retired man or woman.” (Dilulio & Wilson 486). This is why so numerous politicians have proposed changes for the present system. The people in my generation might not see any positive aspects when it’s our time to retire. “In 1950, there were 16 workers to support each individual one beneficiary of Social Security; today, there are only 3.3 workers supporting each Social Safety beneficiary.” (White House). If Social Safety stays unchanged at this rate, Social Stability will be paying out more than it takes in. If we ever reach this stage we will be left with two problems, a lot of people paying into the system now will be cut off of Social Protection, or the government will borrow more money to pay the beneficiaries, which will increase the national debt.

“Unless otherwise stated, payment levels apply equally to aged, blind, and disabled persons.” (State assistance programs for SSI recipients, 3) I believe that if the Social Protection fund only funded beneficiaries who are aged, we would not have such a low number today of 3.3 workers supporting each and every Social Protection beneficiary. “The Budget Enforcement Act, for example, excluded the receipts and disbursements of Social Security from the President’s budget along with the congressional budget resolution. Programs that have been excluded like this are called “off-budget”.” (Collender 12)

Robert M. Ball has proposed a plan to change Social Stability while arguing against President Bush’s proposal of private accounts. One thing that Ball has proposed was, “Gradually raise the cap on earnings covered by Social Safety so that once again 90 percent of all such earnings will be taxed and counted for benefits” (Ball 2). I believe the means of using tax to fix Social Security will work inside the short run, but not within the long. If we do take this approach, should we gradually raise the cap on earnings covered by Social Safety even more in the upcoming when Social Security has gone further into debt? Another proposed change by Ball was, “An estate tax is a highly progressive way of meeting this cost, and dedicating it to Social Stability would strengthen the contributory.” (Ball 3) Now an estate tax, or sometimes called a “death tax”, is a tax on a person’s estate depending on how much he or she was worth. Again, I see a difficulty with this proposal because Ball is suggesting that we use another means of tax to be paid into Social Stability. I personally think it’s wrong to even have an estate tax because those who are taxed an estate tax were most likely small business owners. “More than 70% of family businesses do not survive the second generation; 87% do not make it on the third generation.” (Frequently Asked Questions about the "Death Tax")

In the course of the 2000 elections, President Bush was widely known for his proposals to privatize Social Protection. Most of the Democrat’s are against Bush’s proposals to change Social Protection, whereas, most Republican’s are for Bush’s proposals to change Social Protection. In order to uncover out no matter if men and women might be better off under the current Social Safety system or a privatized system, I researched the average returns among the present system and compared them for the average returns under a private investment or “private account”.

Barbara Boxer published a “Social Safety to Social Insecurity calculator” (Boxer), that calculates the average return an individual will obtain under the current system compared to Bush’s privatization plan. I entered lots of different salaries and years and at each given circumstance, Bush’s plan resulted in a loss. I found this very disturbing considering the large amounts of analysis I have done last year on retirement accounts.

Dave Ramsey published a ”Privatizing Social Security calculator” (Ramsey), that calculates the return you could expect depending on the type of fund you choose, your income, and your age. Compared to Barbara Boxer’s calculator, I found this calculator more accurate because you were able to choose a fund that had an average annual return, which is calculated into how much you contribute over a given amount of years. The result from Dave Ramsey’s calculator shows how much you will acquire from social security and your private accounts when you retire which resulted in a much higher return than social stability.

Last year I took an economics class, which covered a great deal in investing for retirement. Some men and women who are against Bush’s plan of private accounts state that privatizing social stability is too risky for retirement. “For individual investors who have neither the time nor the inclusion to actively monitor a stock or a bong portfolio, mutual funds have an obvious appeal. Just pick a good fund and let the managers do the work for you.” (Groz 105). At the age of 19, I visited Fidelity Investments in Braintree, Massachusetts where I was able to start my own investment portfolio. They showed me several funds that ranged from aggressive growth to conservative growth funds. I then chose a couple of mutual funds that were aggressive growth because I was starting my investing at such a young age. “Many investors draw the inference that they should not invest all their money in a single stock or bond, but rather spread out their investments among a group of securities.” (Groz 106). If private accounts were an option, I would recommend folks to diversify their investments into several different funds just to limit risk.