Social Security , individual responsibility, and the common good

Several of my conservative Facebook friends responded to yesterday's post about Social Security. I commented that "my dad, who was born in 1910, used to thank God every day for Social Security. Beforehand, he said, Grandpa too often lived in a tiny unheated room in the attic."

One of my friends responded, "LaVonne, I would be willing to bet money that your father would have done fine had he been allowed to keep what is taxed away in Social Security. What would he have been able to do had his lifetime income been 15-20% higher?"

My first response is historical: his income would not have been 15-20% higher, because payroll taxes gradually increased between 1937, when the first taxes were levied, until 1975, when he retired. Combining his tax and his employer's, he actually paid at a rate of between 1% and 5.85% (you can check the table here). If my dad had had that extra money, I'm sure he would have saved it - but it would not have financed his retirement.

My second response is practical. Yes, Facebook friend, at today's rates a person could take that extra 15% a year and finance his or her own Social Security. That is, if the person never was overwhelmed by huge educational loans, never lost his or her job, never lost a wage-earning spouse, never decided to use the extra money for the kids' college education or to pay down a mortgage or for catastrophic illness, never was disabled, and never ever spent the money on a vacation.

But now back to the real world.

Look at what's happening with 401(k)s. The theory behind 401(k)s, like my Facebook friend's theory about Social Security, was that individuals could save for their retirement more efficiently than their employers could. Maybe they could, but very few do. As I pointed out in my previous post, the average 50-something American has saved $29,000. If that person needs $50,000/year (before taxes and medical insurance) to live on during retirement, that person is going to need to have a savings account of $1.25 million dollars, or - if he or she gets the average Social Security benefit of $1164/month - a mere $900,800. According to this nifty goal calculator that takes varying interest rates, inflation, and personal parameters into account, our average wage-earner would need to save $1101.22/month for 40 years in order to save up that $1.25 million. And yes, it could be done - by perfect people in a perfect world.

My third response is moral. My dad would have provided for himself, and probably could have, since he was never jobless, had work with good benefits, was never widowed, and was retired for only 20 years, dying just before a debilitating illness completely exhausted his resources. But my dad wasn't thinking only about himself. He was thinking about his responsibility, as a Christian and as a citizen, to the people that used to be called "the less fortunate." He did not want public social programs cut - even if he would benefit by not having to pay taxes to support them - because he believed they were necessary for the common good.

Is Social Security the best way to assure the well-being of widows, orphans, the disabled, and the elderly? So far, it's the best we've got. No doubt it could be improved. There may be other, better ways to achieve the same goals: if our politicians were all working to serve the common good, their policy debates would serve to strengthen our programs. Sadly, the loudest voices in the land are preaching individual liberty without community concern, or community concern without individual sacrifice, or sacrifice for future generations but not for us.