Social Security, Pensions & Personal Responsibility

Continued...

In fact, in October, the U.S. Department of Commerce reported a negative national personal savings rate of 0.7 percent. Americans are spending more than they earn, using credit cards to cover basic needs, refinancing their homes, tapping their 401k savings and selling stocks as if tomorrow will never come.

In signing Social Security into law, President Franklin D. Roosevelt said: "We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

As I see it, Social Security was never meant to be the only measure of protection, rather a cushion to brace from a full frontal fall. Fast-forward to today; we’re making more money then the average American did when the law came to be yet saving less. Something was obviously lost in the translation.

Thankfully, President Bush was blocked from making a change to the Social Security system this year by creating personal saving accounts. I wholeheartedly agree with personal responsibility and accountability, but the plan had many problems and based on our overall lack of financial literacy there is still great need for a social safety net.

In 2005 at least four major employers made changes to the way Americans will spend their retirement years. In early December Verizon Communications announced plans to overhaul its retirement benefits. The company said it will freeze its pension plan and restrict retiree health benefits for some 50,000 non-union employees. To replace its existing pension program, Verizon will offer a more robust 401k retirement savings plan.

Companies have long looked for ways to reduce costs and boost profits, and 401k plans have been in existence long enough for the average American to understand their benefits, yet the number of employees investing in them as part of their retirement strategy is shamefully low.

Regardless of the validity to any claims that corporations are killing America or that the government doesn't care about its people, its time for the people to start caring more about themselves and their financial future.

I am reminded of the fable about the grasshopper and the ant, one was foolhardy and lived only for the sunshine of summer while the other was diligent and determined to have enough provisions to last through the long winter ahead.

No one can say for sure what the future of our social security system will be, or if more companies will put an end to pension plans.

But what I know for sure is we are heading for the very future that Roosevelt attempted to save us from and if we do not make 2006 the year that we focus on financial literacy and personal responsibility then winters biting grip will catch far too many grasshoppers by surprise.