THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, September 22, 1995 TAG: 9509220026
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Letter
LENGTH: Short : 48 lines
We would all be much wealthier in our old age without Social Security, argues E. Alfred Picardi (``An alternative to Social Security,'' Another View, Sept. 11). He says if we were all allowed to invest this money privately, without taxation, it would result in a comfortable retirement. Why has no one thought of this before? Well, someone did. It was the case before 1932. Mr. Picardi has neglected to mention a few points.
Half of Social Security payments on which Mr. Picardi calculated his rosy retirement were paid by the employer. What if the employer did not give him a raise equivalent to that shared payment retrospectively from the first day of employment? What if inexperienced investors chose badly where to invest? What if when a child needed braces or college, or the family needed a house or a car, the investor was not hard-headed or hard-hearted enough to avoid touching those savings? What if the owner of a private-investment company decided to empty the safe one Saturday and go to Argentina? What if the employee was working at a subsistence wage and could not support a family and also buy into investments? What if the investment company was a fraud? What if a failed small business put people deep in debt? Would the debt collectors magnanimously not touch the debtors' savings?
It is true that some investment companies realized 10 percent increase per annum for their investors, but many did not. What about the people who realized, say, 5 percent, or 1 percent? Mr. Picardi chose his starting point as 1937. What happened in 1929 that made the nation feel Social Security was required?
A lucky, wise investor, living in prosperous times, in the upper-income bracket, who takes no chances with his wealth could invest privately in his retirement and end up with a much larger income at retirement than he would have earned on Social Security. I expect he probably has invested his money this way in spite of Social Security. That would be the exception, as it was before Social Security.
Social Security is not to replace private investment. It is to guarantee that even the poor, improvident, inexperienced and unlucky among us will not be a financial burden on society in their old age.
DEAN BURGESS
Portsmouth, Sept. 13, 1995 by CNB