Are Social Security Private Accounts a Good Deal or Raw Deal for African Americans?

How many legs does a dog have if you call thehave to be increased on us no what fix we
tail a leg? Calling the tail a leg doesn't make it adecide today for the system. When and by how
leg. -- Abraham LincolnWhew! I almost wrote amuch are the only questions that need to be
really long article about the Social Securityanswered. Cuts and elimination of some benefits
System and what it means to Blackare inevitable. Retirement will become anathema in
folks.Fortunately, I fell asleep while writing it justthe future.In the past 10,000 or so years of
like you would have reading it. I can't think ofhuman history, retirement didn't exist in any way,
anything more boring then an in depth analysis ofshape or form as it does today. People either got
what is wrong with Social Security.I think that onetoo sick to work or died. We've tried to change
thing the under 40, Black American, internethistory with our current system but we can't
savvy crowd already knows is that the Socialchange humans.If you send someone a check and
Security system is in trouble and that it won't betell them they don't have to work anymore, they
there for us when we retire the same way it iswon't work. There are able-bodied and
for our parents and grandparents. Something hasable-minded senior citizens that are not working
to give.One thing is definitely true, the Socialbecause the governments sends them a check
Security system won't exist in the same formevery month regardless. The truth is, a system
and with the same level of promise that it hasset up like this will collapse one day on its own
now.So, with all the boring stuff out of the way, Ibecause its not the way of humanity.I think its
want to say a few things about private accountsgood that my generation believes more in UFOs
and what I think they mean for Africanthen in Social Security being there for us when
Americans. I'll start with the bottom line up front. Iwe retire. maybe that belief will be the motivation
think that Social Security private accounts are awe need to save outside of Social Security to
good deal for African Americans but with somesecure our own retirement.So, with all of these
very serious reservations.First of all, a privatereservations, you may wonder why I think that
account is the government's attempt to add anSocial Security private accounts are a good for
ownership component to the system. However, inBlack Americans. The answer to that is simple
this case, your ownership rights will be severelymath.Simple Math Reason Number One: Black
restricted.I can invest MY money in stocks,males live to an average age of 66 years old. The
bonds, cash, real estate, businesses, mutual fundsaverage Black male now collects one year of full
and any other investment vehicles I so choose.Social Security retirement benefits. The age of full
The private accounts system will likely offer aretirement for the under 40 crowd is now set at
limited range of choices in nothing but paper67. Watch for proposals to raise that age even
assets like stocks, bonds and money marketmore. The average Black female has a live span
accounts that are managed by large Wall Streetof 72 years meaning that she collects 5 years of
brokerages and mutual funds - the so-calledbenefits. The average White male and White
experts.Ownership with restrictions is merely thefemale have life spans of 76 and 78 years,
illusion of ownership. Very few things you own willrespectively.Personally, I would rather pass my life
have as many complex rules, restrictions and legaltime of Social Security tax dollars on to my
entanglements as private account will havechildren and grandchildren then to a little, old white
attached to it.Second, the government is forcinglady I've never known in my life like we do now
every American to become an investor withoutunder the current system. You may not like this
committing the resources to raise the level oftruth but that is who is getting your benefits
basic financial literacy in this country. Alannow.Simple Math Reason Number Two: It is not
Greenspan has said that basic financial literacyhard at all for the to earn more then the 2%
should be taught in our public schools.Thereturn on investment that Social Security provides
government did this very thing before when theynow. A money market mutual fund is paying
created the 401K retirement system. Thatanywhere from 3% - 5% interest at this time.
system has been a boon to Wall Street,You could easily and safely earn double what
Corporate America and many fellow Americans.Social Security offers.Simple Math Reason Number
However, the pain felt when the 401K gets hurtThree: The average Black American has a net
is not shared as freely as the benefits. Askworth less then $5,000 and that is only one-tenth
employees at Sun Microsystems, Enron, Marthaof the average White American. Social Security
Stewart Omni Media and other companies thatprivate accounts, because they are form of
have gone belly up or otherwise taken a brutalforced savings, will add to the net worth of Black
pounding in the stock market because ofAmericans. All other Americans will see their
mismanagement and corruption.Who will get hurtpersonal wealth build also so I don't expect that
when Social Security private accounts take aprivate accounts will close the racial wealth gap. I
beating? Will the average citizen be the last todo believe that private accounts will inject much
know, as is already the case, when their privateneeded wealth into the accounts of African
accounts hit rock bottom? Without a major,Americans and we need the boost most of
national effort to boost the financial literacy in thisall.Also, because we don't live as long beyond the
country, how will people react to negative newsretirement age (which I hope will one day
about private accounts? Will the governmentchange), more of the wealth in our private
restrict our ability to react to negativeaccounts will get passed to our children, helping
news?Third, what will the government do shouldthem to build wealth. So, a legacy of wealth will
you out-live your private account? Because thebegin to grow from the seeds of investment into
account only offers limited ownership not realprivate accounts.Simple Math Reason Number
ownership, I expect that we won't be able to betFour: This relates to what I said about bucking
their private account at the casino on the dayhuman history by creating this artificially
they retire. I do expect the withdrawals from ourconstructed, man-made system of retirement
private accounts to be amortized over a periodand actually believing that it will sustain us
of time based on something like the average lifeunchanged in perpetuity. The system is breaking
expectancy. What happens if you are the luckydown. We need to start taking complete
somebody that lives a long, healthy life to 120ownership - and control - for our retirement
years old? If your account goes broke, what willsecurity.Partial privatization is a step in the right
the government do for you? If you enroll indirection. Even if the step is one small incremental
private accounts, you agree to a cut in yourone, we must begin somewhere.
benefits. Will you suffer if your private accountI don't think the destitute and disabled should be
suffers?Fourth, the new promises are just asleft out in the cold without our help and support. I
shady as the old ones. Private accounts willdo believe that the truth needs to be told and
salvage the system for some time but ultimatelythat no one is telling it today.So, here is what I
will become plagued by their own, new andhave to say: make a plan to provide for your
different challenges that will need to be fixed by aown financial independence, invest heavily into
future generation.No one in either political partyyour own financial education, invest your money
wants the truth to get out about Social Security.wisely, prepare for the absolute worst and hope
Socialism is a miserable failure. Taxes will ultimatelyfor the absolute best.