Then, this: The AARP Declares War on Younger Americans.
That's too bad, because they might be interested in knowing that one of America's largest and most effective lobbying organizations has just declared war on them. The AARP has now decided that it's going to fight any effort by President Bush to privatize, even partially, that debacle known as Social Security.
The time will come, though, when these people who today are preoccupied with the grossly unimportant will suddenly realize that they've been robbed blind. For their entire working lives they had 14% of their earnings ripped off as a Social Security "contribution." In time they will find out that if they are actually lucky enough to get any of this money back when they reach the age of about 70 or so, they will have realized a return of less than 2% on their "investment.'
Explanation: Divide the people who have been paying Social Security taxes for the past 40 years into four basic groups. White Males, black males, white females, black females. Statistics will show that of these four demographic groups white females have the longest life expectancy; black males the shortest. In 2002 the life expectancy for a newborn white female was 79.9 years. The life expectancy of a newborn black male was 68.8 years. If you were born after 1960 your Social Security full retirement age is 67. This means that a black male can expect to get Social Security benefits for about two years, while a white female can expect to receive those benefits for almost 13 years. You do the math. even if you went to a government school you can figure out that the average white female will receive Social Security benefits 11 years longer than the average black male. It has been estimated that during his lifetime the average black male will lose about $10,000 in income that will be forcibly transferred to a white woman.
The solution? Privatization! If you own your own account it can't be taken from you or your family and given to some stranger living in a retirement community in Palm Desert, California. If you have the misfortune to die before the law allows you to start withdrawing retirement benefits from your account the money goes to your family. Isn't that the way you would want it? Wouldn't you want that money to be spent to make your spouse or children rather than someone you didn't know and who might not have even given you the time of day if you had known them during life?
When you die the money you earned during life shouldn't be seized by government to be transferred to another individual you don't know while your family scrambles about looking for a way to keep their home and pay for your funeral, but that's exactly what the AARP is fighting for.
Chile used to have a Social Security system that was a virtual copy of ours. Chile, however, didn't have an AARP. What Chile did have was politicians who realized that their system was doomed to collapse, and who did something about it. Chile privatized every individual's retirement benefits.
Today in Chile workers pay 10% of their pretax earnings into their own retirement plans. They can elect to pay an additional 10% in pretax earnings if they wish. The companies who manage these funds are prohibited by law from engaging in any other type of business. The sole business purpose of these companies is to take these privately owned retirement accounts and grow them. If they die before the retirement age the money goes to their families. If Chileans live to retirement age they have three options:
- Purchase a family annuity from a life insurance company.
- Leave their funds in a personal account and make monthly withdrawals adjusted to match their life expectancy.
- Any combination of 1 and 2.
The government steps in to guarantee a "minimum pension" for people who have worked at least 20 years and who's benefits don't meet the minimum monthly amount required by the Chilean law.
In Chile 95% of workers participate in the private plan. In America 100% of workers don't have that option, and the AARP is doing everything it can to make sure they never do.
Thanks, AARP. If younger Americans ever figure out what an enemy to their financial future you truly are things may change and you may lose that grip you have on government.
(heads up: Beck)