Archive: Business & Technology

Click to purchaseBack to the ‘entitlement’ word…somewhere along the line this four syllable word became akin to a four letter cuss word.  Let’s cut ‘entitlements’… as if they are windfall gifts.

Pull out your pay stub, W-2, or income tax filing.  Look at the lines labeled FICA and Medicare Taxes paid. 

(To the 10% who are unable to pay these fees… we offer our sincere apologies. Unfortunately, our country’s economic policies have hampered your participation in capitalism…  The goal of this book is to generate or instigate an idea which puts you back in the game. )

For those of you who earn over $100,000 do you realize that you pay as much in Social Security as any American no matter how high their income is?

If you are fortunate enough to max out your FICA withholdings, then you are earning over $110,000 per year.  If one were to

Invest the maximum (FICA taxes on ~ $110,000) amount for twenty years
Then not pay or collect for another 20 years
Then begin collecting Social Security payments…

The payment stream would be approximately equal to investing at 7% (historical stock market rates) and collecting an annuity at ~ 4%.  Not too shabby for a guaranteed payback of over $3,000 per month.  Certainly not a free ‘entitlement’, this is true insurance… simple risk sharing.

Everyone’s individual situation is different.  For those earning less than the maximum, you can estimate your earnings by visiting the government’s web site or picking up a brochure.  You should be receiving an individual statement in the mail annually.  People who do not participate in Social Security do not collect in retirement annuities.  For the top earner’s in a capitalist economy, participation could / should be viewed as insurance to protect the capitalist economy. 

Politically, we have gone full circle on this concept.  Instituted after the Great Depression, Social Security was probably all your grandparents needed to cover their retirement years.  During the past 2 or 3 decades your parents (who defended and grew this nation after WWII) probably had trouble making ends meet with Social Security combined with some form of defined benefits retirement plan.  For the baby boom generation and beyond, Social Security has been threatened with cuts, bankruptcy, and privatization. 

(Privatization under the same Wall Street leadership as brought you the current recession would have been great….   Talk about too big to fail.)

Let’s look at social security from two different perspectives…

First…  If you were asked to participate in a society where everyone had the freedom to make or break their own fortunes, to own their land and business, to invest in new promising technologies, to participate in the economic model which has produced the world’s richest nation in history, where individual voters have a say in government through representation… wouldn’t you want to join??  We would…   

But what if the small print said

WARNING: In order for this ‘capitalist system’ to function effectively, many people win, but just as many people lose.  If you happen to be one of the losers, you better hope that your children win.  If they don’t you will live your twilight years homeless, destitute, and without medical care.  If you lose early enough, you won’t be able to help your children fund post high school education… which locks them into losing as well.

Let’s say you are rational and refuse to sign-up… then the small print is replaced with… 

NOTE: … In the event you participate and lose, you will be entitled to live at a modest lifestyle, with sufficient food, clothing, shelter, and medication to maintain your health… 

Think about it.  Talk amongst yourselves….

Second…  Let’s say that the government fixes the Social Security system as we know it.  “Fix it” is defined as providing the number of dollars that equates to your investment.  Sounds great so far??

If the value, defined as what you get for spending the dollars, is equal to what you paid into the system… it is great…

But what if you can only trade the annuity dollars you collect for a fraction of what you could have bought instead of paying into the system?  Then you come out behind.

Following that logic, one can deduce that the dollar value of social security is meaningless to anyone and everyone if the dollar loses all its value.

So what’s our point?? 

Focusing energy on fixing Social Security while we let the economy tank is like rearranging deck chairs on the Titanic.  Remember Bill Clinton’s wall note…   It’s the economy stupid!!!!!!....   But fixing a capitalist economy without a social safety net for retirement is like… well fine print did you find acceptable??  

For those who accepted the plan with the Warning, have we got a land investment in Chernobyl for you!!!!!!

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