Writes Andrew Sullivan:
Andrew Biggs highlights an interesting new study on social security finding that 48 percent of American workers would opt out if they had the choice. I sure would. [emphasis added]
Okay, but the thing is who is most likely to opt out of social security? Look at what Biggs highlights:
- Almost half (47%) of Americans with a household income of less than $25,000 would choose to opt out of the system, and 48% of those making between $25,000 and $50,000 a year would as well.
- Slightly more than half (52%) of Americans making over $125,000 a year would choose to stop paying Social Security taxes and not receive the benefit.
So, essentially lots of rich people – which is fine, because they likely have some savings, or certainly have the ability to save for retirement – and lots of poor (or very low income) people who hate to see that chunk of change wiped off the back end of their paycheck’s each week. I would be sorely tempted to do so, myself. I’d much rather have that cash in my pocket than in the social security coffers.
But that’s telling, isn’t it? I mean, a nation that can barely scrape together any savings at all, but can work ourselves into a boatload of debt – is that really the nation you want to be polling on whether or not we would voluntarily put money in savings (read: Social Security) or into that burning hole in our pocket?
So whether or not the program is a good one, the point I’m making here is that if we did give people the choice to not save a penny, not even a penny for Social Security, of course tons of us would opt out. We like to spend our money, not save it. And at the end of the day, who or what would step in to offer even what minimal support Social Security offers those who have not built up a retirement or earned a pension, or scraped together any savings at all?
Biggs ponders the meaning of it all:
It reflects, in my view, not a confidence in markets or individual investment skills – both of which have been shown lacking in recent years — so much as a lack of confidence in the Social Security program, which has long faced significant deficits but which has also seen a similar lack of government action to correct them.
I’m not offering up a solution to the solvency of Social Security here. I don’t know what to do about that monster of a problem. But what the data says to me is that this country has a propensity to spend more and save less and that’s about the long and short of it. This doesn’t have near as much to do with people’s perception about solvency of the program or confidence in it. It is entirely behavioral, and the behavior in question is the one that spawned the adage “A fool and his money are soon parted.” Biggs is absolutely correct when he writes, “It is only if personal saving rises that Social Security can be reformed to hold the line on costs and target its mission more closely toward low earners.”
So let’s move cautiously on this one, folks.