Should Social Security Be Mandatory?

Social Security was established in 1935 under the new deal signed by Franklin Delano Roosevelt. Social Security was designed to help U.S. citizens save for retirement. There was a large problem rising in America from elderly people not being physically able to work and not having saved any money for retirement. Social Security was invented so that you could save for retirement without having to set up a roth IRA or money market account. Over time the funds that were intended to be used for social security have been used for other various budget deficits and with the rising deficit in the U.S. economy, it is likely that younger generations may pay into Social Security for their entire lives, but not receive any benefits.

Funds for Social Security and Medicare are collected through the Federal Insurance Contributions Act. Payroll taxes collected will be shown on a payroll check as FICA. It is automatically withdrawn from your payroll check and there is no option to opt out of the program, it is mandatory.

There are many options a person has for saving for retirement, such as Roth or Traditional IRA’s. Both of these programs allow a person to put up to five thousand dollars a year into them. They also have several benefits such as tax shelters for the traditional IRA including tax breaks while the Roth allows less taxing when withdrawing money from the account. Also, depending on your place of employment, there might be an option to open a 401k program. This program is where if you buy stock in your company, your company will match your contributions up to the first five thousand dollars a year. Both IRA’s provide a percentage of gain each year. Social Security provides no percentage of interest earned each year. Money market accounts earn a small amount of interest each year, but typically provide a steady increase each year of about three to five percent. These money market accounts provide liquidity, meaning they can be liquidized or removed from the account to be used very quickly. Social Security is one monthly payment that cannot be liquidized as a large sum. But, these portfolios are built off the stock market, so unfortunately if the stock market is down there is a good chance your investment will be as well. Social Security does provide an income to the household for their entire retirement, with an IRA there is a chance the household could lose money or run out. Social Security in a way, prevents people from running out of money as long as they have the funds.

With the national debt soaring and a lack of people paying into social security there is a good chance the funds will run out before the younger generation will be eligible to claim their benefits. Why not give the hard working citizens a choice in the matter? They should be the one’s to choose where they want their money to go.