Posted by
Jim Saar on Wednesday, September 27, 2006 3:55:47 AM
The President and Congress have been wrestling over the need to fix Social Security. Neither party has come up with any real solution to the growing problem of an underfunded program. President Bush has said the he believes americans should have a choice as to how their retirement funds should be invested. Opponents protest, saying that if people invest in higher risk investments they could end up with much less than the current system will give them. The government will then be forced to take care of them anyway.
Many believe these reasons are nothing more than excuses to allow the government to continue borrowing from the ailing social security fund. I believe the answer lies with the insurance industry.
The current contribution a person makes each year is approximately 15% of their income up to $94,200. A solution would be to have each individual choose to invest in their own SS qualified variable annuity or they can opt out and stay in the government plan. Those who choose the variable annuity will be able to invest up to 5% of their total social security contribution. The variable annuities today have a feature called "Living Benefits" which allow the investor the opportunity to invest in more aggressive funds and still have the guarantee living benefit increase of, in some cases up to 7% per year. These account will have no withdraw provisions and can only be withdrawn by way of "annuitizing" their contract which means receiving a lifetime monthly income, which can also have beneficiary benefits.
This solution overcomes the objections by those who say careless investing will make privatization a disaster that will end up costing the government more in the long run.