And now part two of ten in my series on domestic issues:
American Personal Finance
Part of the problem with solving Social Security is that so many Americans look at it as their retirement income. It’s not. Americans should be saving literally hundreds of thousands of dollars over the decades of their adulthood to pay for their golden years. But Americans aren’t doing that. They aren’t saving for retirement, in fact, they aren’t saving at all. Americans spend 100.1% of the money they earn, and in case you are wondering, yes, they spend one hundred dollars and ten cents for every hundred dollars they earn. Not only are we not saving, we’re spending ourselves into debt that can never be gotten rid of. Clearly Americans do not know how to be responsible stewards of their own finances. Something must be done from the government to induce Americans to save early in their youth for retirement, and in general. A couple thousand dollars not put away at the age of 25 will cost tens of thousands to replace in your mid 30’s. Why? Because that couple thousand dollars builds on itself for that decade, and the interest it earns builds on that, and so on and so forth. Saving a lot and saving early on is the key to having a stable retirement fund.
I'll be perfectly honest here, I don't know how to fix this problem. The biggest part of the problem is what I already said above: Social Security. People expect the government to solve their problems for them. If they go bankrupt, they expect the government to help them out of it, if their home is foreclosed on, they expect help, or unemployment, or food stamps, or whatever. We're a society that over the last fifty years has slowly but surely removed personal responsibility from a people that champion themselves on being independent and self sufficient. And as bad as it might have been before, it's reaching a breaking point. Right now the only thing bolstering the economy is insane consumer spending, but it’s not going to last forever. Food is getting more expensive, as is gas, and other items. It’s draining away money from the American economy, and it leaves American people horribly vulnerable to economic swings. With no safety net in the bank, what will they do when the car breaks down, or when they lose their job? Chances are they will rely on a credit card with ridiculously high interest rates. My grandparents’ generation saved as much as half their paychecks away in the bank, which helped create unparalleled wealth in America. My generation is likely to have negative savings, in other words, huge debt, especially given the cost of an education. The government doesn’t do a very good job by having a nine trillion dollar debt, which sets a horrible example. Having money in the bank, having a secure retirement, and reducing the role of government as a safety net will make us a stronger, more stable nation. It comes down to this:
People should be responsible for their own financial well being. The government shouldn’t be there, be it through Social Security or anything else to support you when you are older. What the government should do, is spur you to do so yourself. We aren’t France, we won’t tax you 40% to secure your future, but it is clear the American people aren’t going to do it ourselves, we live too much in the moment. Social Security is a huge drain on the economy and the nation’s coffers. Let’s reduce it, and maybe some day get rid of it. People need to be given more options to grow their money. The thousands of dollars I give to Social Security over my life will have a much smaller rate of return than the money I save personally, because my investments will be diversified over the 30 some odd years of my adult work life, and they will get as much as eight to ten percent back, while Social Security might only get me half that. It’s time to put control of our future’s back in our hands, even if that control has to be forced down our throats.
So who gets to solve this problem? Maybe we need to hit rock bottom. Maybe we just need to crash and burn without the government there to be our safety net. This kind of change back to what we used to do is a major shift from the status quo, but it's necessary. Or maybe government needs to find a way to get young people to save for retirement, perhaps by offering matching funds for a certain amount of money put away, on the condition that that money absolutely cannot be touched until retirement and offering tax breaks and benefits as well. Personally I think this should be solved by regular people, but regular people aren't stepping up to the plate. Even business has a vested interest in championing savings. If people have more disposable income and savings, they will make better consumers over the long term, instead of spending themselves into oblivion to buoy an otherwise lackluster economy. The bottom line is we need to find a way to get Americans to save more money and spend less! This is a call to duty. I'd rather we all become responsible Americans and people and just fix our own problems, but if they aren't going to do that, there's no harm in looking at all options to fix this.
Take control of your own lives and be responsible, if you don't, you'll pay later in life.
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