Social Security contributions are placed in the General Fund and spent like other taxes. Let's stop this and make your retirement secure.

• Recently former Detroit Tigers pitcher, Denny McLain, was sentenced to 97 months imprisonment for embezzling over $3 million from a company he co-owned.
• Arthur Grodd was indicted with embezzling nearly $1 million from two pension and retirement funds belonging to employees of two roofing companies he owned.
• Alfred Daniels was indicted for embezzling more than $240,000 from his aerospace company.
• Michael Kovaco who owned a farm equipment company was indicted for theft of $98,000 from his company's 401(k) plan.

Some of the biggest pension plans are the most tempting targets. Two of the biggest are the Social Security trust fund (holding $730 billion) and the Federal Civilian Retirement trust fund (holding $461 billion). In 1998, the Social Security and Medicare trust funds increased their holdings by $106 billion dollars. The Civilian Retirement trust fund increased its holdings by $29 billion while the Military Retirement trust fund increased its holdings by $8 billion.

In 1999, Social Security (FICA) taxes took in $117 Billion more than was spent on benefits. Congress overspent other income by $40 Billion. It sure is nice that our Congressem can "borrow" our retirement money to pay for their expensive spending habits.

But, let's be clear about the "holdings" in these trust funds. Are these "holdings" similar to investments in open market securities made by corporate pension funds? No. Cash collected for Social Security or other trust funds is immediately placed in the General Fund. Government trust fund "holdings" are simply special non-negotiable interest bearing securities that represent the transfer of trust fund surpluses by Congress to the General Fund in order to help make its deficits into surpluses.

What's placed in the Social Security trust fund to replace the excess revenue collected? Nothing more than IOUs in the form of non-negotiable treasury bonds.

Senator Earnest "Fritz" Hollings has indicated that "The truth is that the Social Security Trust Fund has already been stripped bare. There is no trust and no fund."

In 1935 when Social Security was established, there was no such thing as computers. No one could track investments of thousands or millions of people. Mutual funds were a virtual impossibility.

The government could not ensure that people established private retirement accounts. So the government has been involved in taking money from workers and giving it to retirees for nearly 65 years. All with no real savings plan for future retirees.

In fact, the excess contributions to the Social Security trust fund have been spent as rapidly as possible.

In his State of the Union address, President Clinton proposed that we use 11% of the "budget surplus" to help fund personal retirement accounts, universal savings accounts. He also wants to use 76% of the surplus for Social Security and Medicare; but this money would in fact be earmarked to pay down the public debt, not saved for future use.

So, in fact, only 11% of the surplus is intended for real retirement savings.

Remember that we made $153 Billion in excess contributions to the Social Security, Civilian and Military Retirement, and Medicare trust funds. And $83 Billion of that was taken to cover overspending of our officials. That left a $70 Billion surplus. Of this, the President earmarks only 11% of the $70 Billion for our future retirement accounts. That's a measly $7.7 Billion out of our $153 Billion!

According to the President's plan, out of $153 Billion we contributed, only $7.7 Billion would actually be placed in our accounts. Only 5% of our excess contributions would be placed in our retirement accounts! That's a commission rate of 95% we pay for the privilege of having the government manage our retirement money.

And the worst part of it is, there are no universal savings accounts. Only talk of them!

And the Republicans do no better. They merely talk of returning a majority of the surplus back to the people in the form of tax breaks.

We now have the technology to ensure that young workers actually save for retirement. The government should ensure that every young person, aged 25 and below, place what would be their Social Security contribution in a group of personally managed retirement funds. By doing so, each worker will have a tremendously successful retirement. Instead of receiving minuscule Social Security payments, they could extract substantially larger payments from their own retirement funds.

How can a young person starting out at age 20 accumulate over $1,000,000?

How can a young person retire with an income of 45% of their working salary instead of a fixed income of almost 15% of their working salary?

How?

If the Social Security (FICA) money taken out of a pay check were placed in relatively safe investments instead of being given to the government.

A young person starting out at age 20 making $20,000 a year can invest 7.5% of this income (which would be "contributed" to the Social Security trust fund). This money could be invested in the bank, bonds, mutual funds, or other investments. What if these investments gained only 7.3% a year, and the worker averages a 3% increase in salary each year (including raises and better jobs)? At age 65 your retirement fund will be nearly $756,000.

The good news is, after taking 45% of your salary (even with 3% increases each year), you will continue to accumulate over $1,000,000 by age 84!

When a person dies, all the money in their account would go to their family, not be kept by the government. That's a substantial amount of wealth.

We must remain faithful to our older people who depend on Social Security. They cannot successfully accumulate the wealth needed to fully participate in this alternative savings plan. For them, the relatively fixed income from Social Security must be retained.

Those aged 40 and above would continue to be covered by traditional Social Security, just as it is today. All their Social Security (FICA) "contributions" would continue to be placed in the Social Security trust fund (so successfully drained each year by Congress).

Those between 25 and 40 would place a varying percentage of their Social Security contribution in their personal retirement accounts. They would benefit proportionally from both their personal retirement fund and from Social Security.

Those below age 25 would be allowed to fully fund their own retirement fund. At retirement, they could take full advantage of their accumulated wealth.

This system is fair.

It's fair to our older folks who now depend on Social Security. It's fair to those who are too old to really accumulate a good nest egg for retirement. It provides them the security of the current fixed income Social Security program.

It's fair to those who can actually accumulate a substantial nest egg. It provides them a real retirement fund rather than IOUs from their neighbors.

It's honest.

The truth is the government always misuses money. Career politicians have a strong desire to control the spending of as much money as possible. Their honor and prestige depends on the size of the budgets they control, not on whether they did the right things for the people back home who elected them. That's the honest truth.

You can honestly control and manage your money better than career government politicians. Your retirement money belongs with you, not with public servants hungry for power.

This is the best system.

Any elderly person would gladly see his or her grandson or granddaughter retire a millionaire rather than depend on the government for a relatively fixed income. Those living on a fixed income know there must be a better way. Let's listen to them!

If you are a young person, you know your grandparents would wish that for you. And, you would wish that for yourself.

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Link to Social Security topic on Bob Sherman's Ethics Web Site
How much is held in the Social Security trust funds?