Saturday, February 12, 2005

Social Security Reform

The idea of allowing younger workers to divert part of their social security benefits into private accounts has picked up the support of two Democrats. I have said before that the Democratic opposition to the plan summarizes the modern Democratic party. They vehemently oppose the idea that individuals could keep and use their own money to better themselves. They of course believe that our money is most wisely used by them, not by us.

The debate has been all over the news, but little has been said about what kind of direct impact it might have on a persons wallet. Dave Ramsey. a very popular financial advisor who has his own radio show has put a very simple calculator on his website that allows people to see , given a certain rate of return, the benefit of private accounts.

The calculator is here.

I entered my age and my current salary, and was informed that at a steady 10% return, I would build a nestegg of close to $1 million, on top of what I would draw from the system. Simply Amazing. The difference between the government controlling your future and you controlling your future.

I believe that this issue has the potential to have a long term impact on the Democratic Party. Young workers understand the market. The invest in the stock market, they know that their money is better invested in their hands than the government's. The Democratic opposition to the plan has the effect of revealing that what has been said about the Democratis party is true. They are the party of big government and they do believe that they deserve your money more than you do. Inform a young person that the President's social security plan could mean close to one million dollors in their pocket when they retire and they will, without a doubt jump at the opportunity.

In the short run more Democrats will most likely realize that they damage the party with the opposition, which will set up a huge (and unexpected by most pundits) policy victory for the President.

The sooner it happens, the more money I will have when I retire.

Be sure to check the current posts for updates.