Social Security faces no crisis now or in the future. It will not "go bankrupt." It will "be there," not only for those of us now enjoying it or looking forward to it in the near future, but for the baby boomers and the "Generation X" following them. All this is true as long as those who would nibble away at Social Security or destroy it in the name of "privatization" do not have their political way. But they very likely will not, since the elderly - and their children - vote, and will vote sensibly as the full implications of the issue become apparent.
Some would solve the presumed problems of Social Security by replacing it, in whole or in part, with private investment in a booming stock market, which recent events have confirmed can go down as well as up.This is like advising us to forgo our life insurance or health insurance premiums and turn them over to our broker. If we can be sure that we will not need expensive medical care or die early and leave destitute dependents, that scheme might work out. But how many would consider this wise?
It is a fine idea, for those that can, to invest in addition to contributing to Social Security, and millions of Americans do. What those who would diminish Social Security in order to "privatize" do not tell us is that private investment, whether directly or in 401 , 403 , IRAs or Keogh plans, whatever its advantages, does not provide what Social Security has offered for six decades.
The legitimate concerns of millions of Americans that their retirement income may not prove adequate can be met by adding to Social Security, not cutting it or substituting the vagaries and - for most - the confusions and costs of private investment. I have proposed adding to the Social Security system a program of voluntary additional contributions.
Privatizers do have a point, though. Average Social Security benefits are too low, coming now to only about $10,000 annually for a family with a retired worker. Millions of middle-class Americans are concerned that their retirement income will be inadequate.
There is a way to meet their needs and aspirations - "publicization."
I would offer all participants in the Social Security system the chance to make additional, entirely voluntary contributions to Social Security. These would be credited to their individual Social Security accounts. And they would be invested, by choice of the participant, in a passive, indexed stock fund; a passive, indexed bond fund; or Treasury securities. Contributions could be made not only by the self-employed and employees themselves, but by employers on behalf of their employees.
The contributions would be tax-deductible, like current IRAs and 401 , but ultimate benefits would be taxable. The contributors' accounts would be credited with the income and capital gains on their investments, whatever they were, both up to retirement and afterward. They would, on retirement, receive actuarially fair annuities with cost-of-living adjustments or, better, adjustments related to changes of wages of those working.
All this would add enormously to Social Security benefits without taking away or risking a penny of current or future benefits.