We Must Not Fail

Since the Great Depression America's Social Security system has stood as one of the great moral victories of the twentieth century. We must extend that moral victory to generations to come.

We must not fail our seniors. Nor must we cripple our children's future. We must bring an end to the practice of spending the nation's retirement fund on things it was not intended for. We must do the hard work necessary to solve this problem and secure our nation's future, because that is what Americans have always done.

Our Solution

Today's Americans face a greater challenge in retirement preparation than did people in the past. Today, corporate defined benefit programs are rapidly being closed to new entrants, and Social Security faces a tidal wave of Baby Boomer retirements that threaten to overwhelm the program's ability to pay its promised benefits.

Tomorrow's retirees won't be able to depend upon the government or their employers to provide retirement security. Instead, they will need to establish a nest-egg of their own, savings and investments upon which to build a foundation of financial security for themselves and their families.

There are a variety of ways to save for retirement, from 401(k)s to IRAs, and government should support them all. But an additional way to build savings for retirement is through individual, protected accounts established through Social Security.

Here's what these accounts will look like. Money will be automatically deducted from your paycheck just as it is now. This is not new money you have to find; it's a portion of the money that currently goes into Social Security from you and your employer.

The money that each worker puts into a protected account today will be invested and grow over time. And best of all, we'll take our retirement money away from misuse by politicians in Washington.

You will have a small number of low-cost investment choices - diversified index funds of bonds and stocks. You will not be picking individual stocks. Each fund consists of hundreds or even thousands of different companies, and you'd own a little bit of each. This protects first-time investors. And remember, these protected accounts will be voluntary.

Will these accounts protect your money better than the current system?

People fear that the government will find some way to get at your protected account money, either through taxation or outright confiscation. Maybe. But with this kind of account you can keep track of your money, which makes it a lot harder for the government to misuse it. The money is in your own account and is in your name. It's your property, not part of some vague "trust fund" that even the experts don't understand.

And since it's your property, whatever money you don't use from your account you can pass on to your spouse, kids, or grandkids. It's important to have a nest egg, and protected accounts help build one. We all want to leave our family with more than memories and photos. This reform will mean that even people who die prematurely have some nest egg to leave to their heirs.

Some people ask: "Won't it be expensive to move from current system to a more modern one?"

The good news is that if we act now we can manage the transition without cutting benefits to current retirees.

Social Security will begin running deficits in about 13 years, but today the Social Security system takes in more money from taxes than it pays out in benefits. If you are working, the Social Security system takes a lot of money from you: over $6,400 from the average American family, according to the latest figures from the government.

Much of that money goes to benefits for today's seniors, but what's left over-about one dollar out of every six-the government spends on other things. That leftover money is the "trust fund" you've heard about. It's not saved for you; it is just being spent. This means there is enough money coming into Social Security right now to create protected accounts and keep your grandmother protected at the same time.

Protected accounts will not take your grandmother's check away. Instead, they will take the "trust fund" away from the politicians, and sock it away for your future.

Times have changed. Today live in a very different world than when FDR was President. People live longer and have fewer children. Young people deserve as much security as their grandparents enjoy. So let's move toward change now, and start putting money into protected accounts as soon as we can.