BUILDING REAL WEALTH
December 11, 2007
Individual Retirement Accounts and 401(k)s have made the United States into a nation of investors. But the one drawback is that, by turning Americans into investors, IRAs mislead people about the future of Social Security, says Ed Feulner, president of the Heritage Foundation.Social Security isn't an asset the way an IRA is -- it's an unfunded obligation:
- There are about $2 trillion worth of IOUs in the Social Security trust fund; an awfully big promise for tomorrow's taxpayers to make good on.
- According to the program's trustees, in just 10 years Social Security will start paying out more in benefits than it collects in taxes.
- And the shortfalls will soar quickly as more and more Baby Boomers retire, leaving fewer workers to pay into the system each year.
The best way to put Social Security on solid financial ground is to create retirement accounts that individual workers would own, says Feulner. Each worker should be allowed to control a portion of the payroll taxes Washington takes from his or her paycheck. As with an IRA, the worker would be able to invest and grow this money. Tens of millions of Americans have already joined the investor class. We need to open that option to millions more and allow them to build real wealth for the future. That's smarter than counting on Uncle Sam to keep his fiscally irresponsible promises.
Source: Ed Feulner, "Building real wealth," Washington Times, December 11, 2007.
Browse more articles on Economic Issues