Young Adults deserve the same level of financial security that their grandparents enjoy

Growing old in the "good old days" wasn’t always so easy. In fact, it could be rough. While many elderly parents moved in with an adult child or relied on the kindness of organized religion, fraternal organizations and friends, other senior citizens were relegated to retirement homes with often depressing conditions. Still others went hungry and under-clothed. Social Security changed much of this.

Since its enactment, President Franklin Roosevelt’s Social Security Act of 1935 has saved millions of seniors from poverty. The exact numbers will never be known. Over the decades, the program helped retirees achieve a level of self-respect and independence.

Listen to the news and you’re likely to hear that Social Security faces a crisis today. It’s arguable whether the program’s finances are in such dire straits that the word "crisis" is warranted, but there’s another full-blown crisis out there and it’s been simmering for years.

According to a December 2004 Pew Research Center poll, only seven percent of Americans ages 18-29 believe they will get their full Social Security benefits when they retire. Combine this with the old conventional wisdom that more Americans under 40 believe in UFOs than in Social Security and it’s clear younger Americans have a bleak outlook for the nation’s public pension system.

Despite this "confidence crisis," young adults deserve the same level of financial security when they retire that their parents and grandparents enjoy today. Under the current system, however, that is increasingly unlikely to happen.

Because the Social Security program operates on a pay-as-you-go schedule, current workers pay a percentage of each paycheck to provide the monthly retirement check drawn by millions of retirees. For the first few decades, this system worked well. There were far more workers than retirees so payroll taxes stayed relatively low. Over time, however, more and more people began entering retirement and fewer workers were available to pay taxes. As a result, payroll taxes had to be raised - again and again and again.

Since 1935, taxes supporting Social Security retirement have been raised over twenty times. That would be fine if the system had actually been fixed. But it hasn’t. And today, many in Congress and around the country want to raise payroll taxes yet again to shore up the system. This has never provided a permanent solution. Why do they think it will this time?

Despite the availability of retirement planners, 401(k)s, IRAs, Keoghs, and a host of other investment options, many Americans today can’t take advantage of them because they lack the discretionary income to do so. Higher payroll taxes won’t help.

Workers pay one dollar of every eight they earn to support the retirement program. In another 20-30 years, they will pay one dollar of every five if we don't do something to address the coming financial shortfall. The existing program already obligates current and future workers to much higher payroll taxes. After paying FICA and income taxes, their rent or mortgage, buying groceries, and taking care of the kids’ needs, very little remains for retirement purposes.

The Commerce Department’s Bureau of Economic Analysis reports that personal savings last year hovered between 0.1% and 3.0%. Financial security in retirement doesn’t seem to be a concern to most working Americans. Keeping their heads above water right now is their major worry.

As President Bush and the Congress begin the debate over Social Security’s future, it’s important that they remember whom they’re trying to help. Current retirees and those approaching retirement age have nothing to worry about - their benefits will be secure and untouched for the rest of their lives. It’s the younger workers that stand to gain the most from adding a system of personal retirement accounts to the existing Social Security retirement program.

Enabling today’s workers to invest in personal retirement accounts will give them nest eggs they can depend on once they retire. Like their parents and grandparents, they deserve a shot at financial security. Let’s give it to them.