Boomers Must Support Reform; Younger Workers Outnumbered

August 8, 2003

Today's retirees "need to put their strength behind reform that allows for personal retirement accounts," writes Max Pappas, Social Security analyst for Washington's grassroots organization, Citizens for a Sound Economy. In his latest column, Pappas urges the retiring generation to free younger workers from participation in an increasingly burdensome system. Excerpts of his article, "Is Social Security a Good Deal for Retirees?" follow:

"It is regrettable that today's seniors were required to spend their working lives contributing to a system that does not allow for the accumulation of wealth… but their children don't have to be. They can use the power they wield in the ballot box to make such an opportunity possible for their kids by supporting personal retirement accounts.

"Personal retirement accounts do not threaten benefits, politicians do. Jo Anne Barnhart, the Commissioner of Social Security, said to the Washington Times, 'no proposal that has been put forth affects benefits for current and near retirees.' Retirees have paid their dues, and the government must make sure they get the retirement money they have been promised.

"While no proposal supporting personal retirement accounts threatens benefits, not changing the current system does. It is widely known that the current system will go bust soon. It is less widely known that Congress has the power, as ruled by the Supreme Court, to cut our Social Security benefits at will and that we do not own any of the money we have put in. In this light, Social Security is to retirement security what slingshots are to national security.

"Personal retirement accounts would ensure both a more secure and more prosperous retirement for the children of today's retirees. Michael Tanner and Peter Ferrara of the Cato Institute have calculated that a married couple, both earning an average income, would accumulate $1,776,634 by the time they retired if they started working and saving today, and earned a conservative 6 percent annual return. The average return for a portfolio with 75 percent stock and 25 percent bonds from 1872- 2000 is 6.32 percent. Continuing at 6 percent, this would provide $106,599 in earnings per year forever. With Social Security this couple would get $36,436 per year as long as they were both alive, $20,715 per year after one died, and nothing once they have both passed.

"The alternative to saving Social Security through personal retirement accounts is to keep doing what has been done in the past when the system ran short of money: raise taxes and cut benefits. Today's seniors have lived through over 20 Social Security tax hikes that have raised the tax from 2 percent on the first $3,000 of income to 12.4 percent on the first $87,000. But doing the same thing over and over again and expecting different results is the definition of insanity.

"Personal retirement accounts are… a solution that ensures that today's retirees receive the money they have been promised by the government. It is an opportunity for today's retirees to free their children and grandchildren of the burden and danger of relying on a government promise for their retirement.

"A generation that took to the polls to ensure a better retirement for their children and grandchildren… now that would be the Greatest Generation."

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