Social Security logoI have been thinking recently about social security and what actions the Government might take to solve the impending crisis. Some very strong measures must be taken simply because the United States can not afford to administer this program by increasing the national debt to any greater extent than what is already projected. The solution obviously comes down to either increasing the individual withholding which will prove more difficult as taxes increase to support the nonstop governmental spending every year, or the benefits provided can be reduced which will prove very unpopular. Any reduction of benefits will likely be in the form of elevating the eligible retirement age and/or by lowering the level of benefits paid out. Once the Government really becomes convinced they must act, then one of these actions or a combination of them must be executed if the program is to be viable in the future.

A question worth pondering arises by considering the amount of pain that will be created to work this program back into solvency, what is the Government willing to do to accomplish it? What if they increase the withholding and the eligibility age and drive the benefits down only to find they still have an unsustainable solution remaining? A solution that has such miniscule benefits for the masses of baby boomers that will be drawing upon it that it will be politically suicidal. There will be a delicate balance between how much higher the withholding can increase versus how much the benefit to recipients can be driven down, and there will be definite limits to both choices which may not be enough to fully solve the issue going forward.

With any potential shortfall looming alongside what is surely to be a healthy dose of governmental incompetence and inefficiency, it leads me to an obvious target that may be plundered in order to augment the public system. That target being individual IRAs, 401ks, SEPs, or any other contribution-based accounts that individuals use to invest for their retirements. Since these accounts only exist because the Government provided for them in the tax code, would they possibly consider them to be an alternative to social security thus sweep them over into the public system and away from the individuals? Would they dare appropriate personal accounts to bolster a failed public system, perhaps by adding some type of credit in excess of the normal calculated social security benefit for these individuals even if it will be insufficient compensation for a lifetime of personal contributions? Another method that would accomplish the same thing is excluding people with personal retirement accounts from receiving social security benefits until their personal accounts have been exhausted using a prescribed withdrawal schedule, only then would they be eligible for social security benefits for their remaining years. The Government would essentially exclude, thus penalize, all the lifetime savers so benefits can be paid to the ones that did not provide for their futures. Does this sound familiar in our world today? You may be thinking to yourself “they would not do that,” or “they can’t do that.” My reply to both is a simple one word question. Really? I have seen many things recently they “could not do” and they did them regardless without hesitation or much resistance. Making an assumption that they have any integrity when it comes to their agenda at hand seems laughable based on recent events and their demonstrated arrogance. Whatever your mindset is concerning our Government’s integrity, it is a thought worth considering.