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Last week’s column on the Amish opting out of Social Security generated a tremendous response. Within a few hours of publication, I had hundreds of comments on my blog.
I want you to know that I appreciated all the comments, even the ones that were critical. It’s a touchy, complicated subject. There are no easy answers. And that’s precisely why I continually try to initiate conversation and debate on this very important topic.
Since you opened up in spades, today I’d like to highlight some of the things that were said and offer some of my additional thoughts where appropriate.
Let’s start with something that I suspected — most of you had no idea that there was even such a thing as a religious exemption for Social Security.
I can see why — it’s not advertised or widely reported. But particular groups are able to opt out of the system.
Now, whether any religious exemption should exist is a whole separate matter!
That was what I was really calling into question when I asked you whether anyone philosophically opposed to the system should be allowed the same opt out provision.
One reader named Ken explained his position this way:
“I think the Amish are special and need to be treated different. The average American cannot be trusted to take care of himself and Uncle Sam must do it. But Amish people are actually capable and trustworthy so it’s OK for them. Anyone who wants to avoid the SS tax can simply become Amish; I think their doors are open.”
But I’m sorry, I just can’t accept that.
After all, while it’s true that the Amish essentially live in their own “closed system” … there’s no reason that another group shouldn’t be granted the same latitude today, even if their religion didn’t exist in 1949.
And going one step further, how can we draw any line that validates one religious group’s belief system and dismisses any other individual’s personal worldview?
I think it’s pretty clear: Either the exemption has to go or everyone has to have the option to use it.
Personally speaking, I’m okay with either of those options.
I just emphatically believe that any other solution clearly favors certain groups and belief systems, and goes against our country’s ideal of treating everyone equally.
Some of you were also put off by the suggestion that Social Security is a “government handout.”
As Mimi said it:
“It is not a government handout — it is a safety net that is needed, especially given the way our world is today. Everyone is an individualist until, for whatever reason, they are the ones who need help.”
Others echoed this sentiment, and argued that because we pay into the system, Social Security checks do not amount to government handouts.
Yes, that’s true to an extent. But we do not necessarily receive what we put back in, nor is what we receive always proportional to what we contributed. In some cases, checks are mailed to people who didn’t contribute at all.
But look, I’m not here to argue semantics. Nor am I trying to imply that younger Americans shouldn’t take care of the generations that preceded them.
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Let Me Be Clear: I Absolutely Think
It Is My Generation’s Responsibility
To Take Care of Our Elders!
At the same time, there is a very valid, albeit highly philosophical, debate on precisely how that responsibility should be administered — i.e. whether any mandatory, governmental system is justified, necessary, etc.
Annemarie put it this way:
“While I believe in principles and choices, I also realize that too many people do not take responsibility for their own well-being and the entitlement mentality has steadily grown like a cancer.”
And as Frances explained, we are clearly not teaching our children how to make sound financial decisions, which is only compounding the problem:
“I was born and raised in Pennsylvania and am impressed with the Amish self-sufficiency and community-oriented lifestyle.
“I was also raised to be self-sufficient and take care of myself. Unfortunately, what I did not learn growing up was how to manage my OWN stock portfolio. I relied on a 401K, paying high fees over time to fund managers …
“The average person doesn’t grow up knowing the intricacies of financial management. We need to teach this to our children in school, and at home if possible, so they have a chance to obtain financial self-sufficiency when they reach retirement, or before.”
Frances is spot on. Clearly, our country is not doing enough to teach the basic principles of personal finance.
Of course, there’s also the basic issue of human nature, which is something many of you brought up.
I think Mack, a financial advisor, summed it up best:
“I also would opt out of Social Security if I could. I have one concern about allowing everyone to do so however. Being a financial advisor, I come in contact with a lot of people who have the money to save or purchase life or disability insurance, but won’t. They’d rather spend it. What happens to those people when it’s time to retire, or they are disabled, or die? Will we (on an individual basis or through the government) let them live with the consequences of their actions, or will we bail them out?”
The idea here is that even folks who know what to do, don’t necessarily do it, which brings us right back to the very same “greater good” philosophical debate.
Either way, practically speaking, as Celia points out, it would be extremely difficult to discontinue Social Security entirely at this point:
“The way things are now — we have a problem. Since there is no actual pool of money being held, if a particular generation wins this debate and is able to opt out — who will step up to care for the elderly who are currently dependent on “the system’? As a society, we have allowed a “catch 22′ to persist.”
Celia, you’re right. So what about the system we do have then? Well …
If There’s One Thing Nearly All of Us Agree On,
It’s That the Current Social Security System Needs Fixing!
To be fair, a few of you said the system is functioning as it is — including one comment from Norman that proclaimed Social Security to be “very structurally sound, with tremendous surpluses.”
But the vast majority of you indicated that, at the very least, Social Security is in need of an overhaul.
Some readers said they favored greater choices. Here’s what a poster with the handle “wenchypoo” suggested:
“I believe we should be given a choice: Elect Social Security for our retirement (and contribute to it), or elect an IRA for our retirement (and contribute to it), but not pay for both, and NO SWITCHING!! People can’t seem to get enough money into IRAs because we’re paying for us and them, too! By funneling our ‘normal’ SS contributions plus an IRA contribution (maybe even our Medicare taxes too) into our IRAs, we’d come out a lot better off — and don’t forget the tax credit. SS doesn’t have one.”
Maxx also suggested the use of private options:
“Consider the alternative to answer your question. What would you do without the program?
“A. Nothing — result, you have nothing and become dependent on family or friends until death.
“B. Buy an insurance policy in case of disability and make investments for retirement — result, self reliant, not a burden to anyone, increases bank deposits, banks have higher reserves, economic stability and growth.
“What we have now — bankrupt program, abuse, fraud, unstable economics, high debts and government dependency.
“I opt for B.”
And Chuck agreed, saying:
“Like many, I am quite capable of managing my own resources. For those who are not, there are reputable professional planners. About the least competent is our government.”
Others, like David, worried about a private solution:
“Who would have gotten rich? Not the individual investor who lost his shirt; it would have been the big money making machines hoarding it for CEO bonuses and dividends for their stock holders. It sure wouldn’t have been the guy hoping to retire. You still think we would be better off without a government run program? Come on now! Show us how we would be better off.”
Meanwhile, I think Jay best outlined a compromise with his suggestion that we shouldn’t scrap the system but must treat the money like it’s sacred and hold our politicians accountable for their lack of fiscal responsibility. Here’s how he put it:
“I disagree with tossing out or bailing out of Social Security because it’s broken.
“We can and must demand that we fix it by taking action to eliminate deficit operations and raiding its treasury and replacing hard cash with I.O.U.s so the government can go spend on unfunded (taxpayer unapproved) expenditures.
“That is our real and present danger. We must demand our elected officials stop evading their duties and deal squarely with their wrong doing and restore social security to its fundamental function; with its assets in invested hard cash, NOT in federal government I.O.U.s which do not produce income or pay benefits.”
This is one sentiment I heard over and over again — essentially that our Social Security contributions should be kept in a separate UNTOUCHABLE account.
And I couldn’t agree more!
There’s no question that Social Security funds were never meant to be raided. And Washington’s reckless spending has made the task of saving the system all that much harder.
I also certainly recognize that many lower-wage Americans would still struggle to save enough for a comfortable retirement … and that many people lack either the financial savvy or personal discipline (or both) to take care of their own affairs.
So yes, maybe a basic public safety net is still needed, despite the philosophical arguments that the private sector could provide the same thing more efficiently.
But what we’ve been doing isn’t sustainable, and even Social Security’s own trustees and website will tell you as much:
First, demographics are now going against the system and there’s no reason to believe they will change anytime soon.
Second, rather than keeping “our” money in a completely separate, untouchable place, our illustrious politicians have borrowed and spent much of it with the promise that they’ll replace it later.
Third, the number and type of beneficiaries has continually expanded … the tax rates have continually risen … and the age that benefits kick in will also continue to increase.
Fourth, and most importantly, never forget that lawmakers can change the system any way they see fit, at any time. There’s no immutable guarantee that what you paid in will be returned to you, even if you live to be 100. And it certainly won’t be paid back to you if you die prematurely.
Here Are My Bottom Line Thoughts,
Precisely the Points I Make to My Own Family:
If you’re close to retirement, or already collecting benefits, you’re likely to continue to get checks. And after a lifetime of paying, you deserve them!
Moreover, any retirement strategies I’ve previously made regarding Social Security still stand — delaying benefits, re-filing, etc.
However, none of us, regardless of our age, should expect to live on Social Security alone … if at all.
Instead, we should do our best to build our private nest eggs carefully, with an eye toward generating solid income for our golden years.
That way, no matter what happens next, or what unforeseen turn we find our lives taking, we’ll have done everything in our power to be prepared.
Best wishes,
Nilus
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