Younger generatioin should be listening carefully to Social Security debate too

Jennifer Aniston’s character on Friends, Rachel, once lamented after receiving her very first paycheck, “Who’s FICA?  Why’s he getting all of my money?”  Rachel was echoing a question many of us have asked when we see our paycheck go down by at least five percent because of “FICA.”

FICA, or Federal Insurance Contributions Act, is what takes money out of your paycheck and puts it in “the bank” for Social Security and Medicare.

For the last several years, FICA are in the heat of a political debate that is set to be one of the defining issues of the 2012 campaign season.  Political pundits argue that presidential candidates, including the incumbent President Barack Obama, will be vying for that all important “mature” vote while they debate this issue.

But it shouldn’t just be those “mature” folks that pay attention to the debate.  College age voters should be paying close attention.  That money comes out of our paychecks too.

Social Security, of course, is the system that allows you to collect a retirement check at 67 that will keep you earning a little less than half of what you were earning before you decided to go waste away in Margaritaville.  And Medicare will help you get medical care after you get far too sunburnt on the beach.

Most politicians, including Obama, admit that the system needs to be reformed.  The status quo simply is not going to do.  And why is that?  Well, for one, there have been several years that the Social Security program did not take in as much money as it needed to pay out.  And that is only going keep happening with increasing regularity.

Social Security has a trust fund that earns interest that can backfill in these types of situations.  The problem with that “failsafe” however, is that Congress routinely takes money out of that fund.  In fact, President Bill Clinton borrowed money from that fund to “balance the budget,” as did President George W. Bush, who cut taxes at the same time.

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The bottom line is that there is some inherent risk in the Social Security program, and politicians are going to be bringing it up more and more.  While it is a program that has “worked” for years, that doesn’t mean it’s a great program.

In fact, why shouldn’t younger members be allowed to opt out of the program?  That may seem radical, but after you pay taxes, why should the government tell you what to do with your money?  If that extra $100 a month could help you make rent or buy you food for the month, isn’t it you who should decide if you save it for retirement or if you eat?  Furthermore, if you want to invest that money in something other than this system, why shouldn’t you be able to?

There is one basic argument against those questions: we’re not responsible enough to save our own money; we need the government to do it for us.  And let’s be honest, there is a lot of truth to that statement.  A lot .  But it also creates a self-fulfilling prophecy.  People have a way of living up to the expectations given them.  If the government keeps expecting and providing for young people to be irresponsible, then they will be.

Another rebuttal to the responsibility argument is that there is no freedom in a mandatory program.  If, as a young adult, I want to save my money differently (or not save it at all), that should be my choice to make.  If you want to put your money elsewhere (say, pay student loans off first, then start saving for retirement), shouldn’t you be able to do that?

Finally, most retirees do not live off of Social Security alone.  In fact, it usually accounts for 50 percent or less of their income.  So it’s not a failsafe.  Some people might wish to put all of their retirement money into a different type of investment instead of splitting it.

The bottom line is that young people should be paying attention to this Social Security debate that will without a doubt be a large part of both parties’ bid for the White House in 2012.  Especially since it is our money that is paying the Social Security bill as we speak.