Today, Oct. 19, is a special day — the day I turn 65 years old, traditionally known as the retirement age for working Americans. ¬†At this point, most Americans sign up for Social Security and Medicare.
In the early 1980s, I burned my Social Security card at the New Orleans Investment Conference in protest of the state pension system.
At that time, I asked an audience of several hundred investors, ‚??By a show of hands, how many of you are on Social Security and Medicare?‚?Ě ¬†Over half the audience raised their hand.
Then, I asked, ‚??How many of you are on food stamps?‚?Ě
Every hand came down.
My point was simple. ¬†The food stamp is a social welfare program limited to the low-income individuals and families. ¬†A family of four qualifies for food stamps only if they earn less than $30,000 a year. ¬†There‚??s a means test to qualify, and most Americans attending investment conferences don‚??t need food stamps. ¬†(Sadly, though, 47 million Americans are now on food stamps, which the government now calls SNAP because getting food stamps is a snap!)
On the other hand, Social Security and Medicare are universal social insurance plans, and there‚??s the rub. ¬†All workers pay into the programs, and at age 65 (sometimes earlier) they all qualify for benefits, even though most Americans can afford their own retirement program and private health insurance. ¬†¬†In short, both government programs duplicate private alternatives for most Americans. ¬†Bill Gates and Warren Buffett have been successful enough to not need Social Security and Medicare. ¬†(Buffett told me a few years ago that he has signed up for Social Secuirty and Medicare, but obviously doesn’t need them for his retirement or medical needs.)
I asked the audience, ‚??By the show of hands, how many of you really need Social Security and Medicare to live on?‚?Ě
Not a single hand went up.¬† Admittedly attendees at an investment conference are wealthy.
But one of the retirees responded, ‚??Yes, but we paid FICA taxes all our lives. ¬†We earned it!‚?Ě
True enough. ¬†But the real question is, can we afford to continue such an expensive government program? ¬†Should we pay for Bill Gates‚?? and Warren Buffett’s retirement and medical bills?
The fundamental flaw in Social Security and Medicare is that they violate the ‚??welfare principle‚?Ě in economics. ¬†The welfare principle forms the fundamental basis of all charitable work in churches and other private organizations: ¬†assist those who need help, and equally important, don‚??t assist individuals who can take care of themselves. ¬†To do otherwise only destroys personal initiative and independence, and encourages unnecessary expenses and inefficiency.
Social Security and Medicare are not safety net or but a dragnet. ¬†It pulls everyone in and makes us ultimately a ward of the state.
Should I take Social Security?
I‚??ve thought long and hard about what to do on this day. I have no intention of retiring; I love what I do, and I hope I will be able to do it until the day I die ¬†— writing my investment newsletter, speaking at conferences, publishing books, and producing conferences like Freedom Fest.
As an ardent supporter of self reliance and limited government, I also feel a little reluctant to accept Social Security payments when our government is so deeply in debt and a state program so flawed. While everyone can use a little extra cash, I don‚??t really need Social Security. I‚??ve worked hard, saved, and invested to build up my net worth. I‚??ve paid off my home mortgage, and I have both a company pension program and an individual retirement account. ¬†Like many wise Americans, I‚??ve followed the golden principles of ‚??industry, thrift and prudence‚?Ě advocated by Benjamin Franklin in ‚??The Way of Wealth.‚?Ě
Over the past year I‚??ve pondered two questions:
1. ¬†Should I sign up for Social Security?
2. ¬†What should I do with my monthly Social Security check?
I‚??ve asked a variety of friends and colleagues what they do with their monthly Social Security check. ¬†Many depend on Social Security for their livelihood. ¬†Others say they don‚??t do anything special with the money. It is deposited directly into their bank accounts, and they spend it as they do any other income.
This started me to thinking: ¬†Can Social Security payments be used for a good cause?
In the early 1970s, my uncle W. Cleon Skousen, a political conservative, told me that when he turned 65, he would refuse Social Security payments because he didn‚??t believe in a government-imposed pension system. ¬†But in 1978, when he turned 65, he couldn‚??t resist the extra monthly income of $650. After all, he had earned it during his working years. It had been deducted from his paycheck and set aside for him (theoretically at least) in the Social Security trust fund. It was his. ¬†So he went down to the Social Security office in Salt Lake City and signed up.
But he didn‚??t just spend the money for daily living expenses. ¬†He decided to sign the monthly Treasury check over to his favorite cause, his National Center for Constitutional Studies. ¬†His personal mission was to teach Americans about the Constitution and how to preserve it. ¬†Through NCCS, he traveled the country giving Constitutional seminars to patriotic Americans.
I think he made the right decision. ¬†I‚??m sure his foundation made better use of the money than the federal government would have by wasting it on some boondoggle.
Put your Social Security check to good use
Following in my uncle‚??s footsteps, I‚??ve decided to sign up for Social Security. ¬†Since I don‚??t need the money to live on, I‚??ve decided to invest my monthly government check into a variety of good causes. ¬†Based on my past earnings, I should receive a check of around $1,800 a month, automatically transferred into my bank account.
Too often wealthy retirees don‚??t know what to do with Social Security. ¬†They sign up and deposit it into their bank accounts and don‚??t know what to do with the money.
I suggest they take the Social Security Pledge. ¬†¬†If you are wealthy enough, use part or all of your Social Security proceeds to invest in a favorite cause or two. ¬†Invest 10 percent or 100 percent of your monthly Social Security check in your favorite charity, foundation, think tank, church or synagogue, or other good cause.
To take the Social Security Pledge, go to this website.
You don‚??t have to limit yourself to giving to non-profit organizations that are tax deductible. ¬†You can give your Social Security check to any organization, public or private, or to individuals. ¬†You can donate it to your favorite political party. ¬†You can even give the funds to a student scholarship — for your grandchildren, for example. ¬†Or somebody who has a medical need.
Another possibility is to invest your government check in free enterprise. Buy shares in individual stocks or mutual funds through his brokerage account. ¬†Better yet, fund inventors who could use the money to advance their work.
There are lots of possibilities. ¬†Be creative and have some fun with it. ¬†Don‚??t let the money sit there. ¬†Put it to good use!
Bill Gates and Warren Buffett have their “Giving Pledge,” where billionaires promise to give away the majority of their wealth when they die. ¬†My Social Security Pledge is better — to give money to good causes when you are alive. ¬†Besides, more Americans can participate.
Banking technology has made it simple and efficient to invest in good causes. ¬†Use an online banking service–all banks have them now. ¬†Make a list of how much money you wish to give to each organization or cause, so that donations equal your monthly Social Security check, or whatever amount you feel comfortable giving. Then inform your online bank of the names and addresses of the organizations and how much you wish to donate to each. ¬†Your online bank will do the rest by automatically sending them a check every month. ¬†You can change the organizations and amounts whenever you want. ¬†It‚??s that simple.
The potential is huge for the Social Security Pledge to help charitable organizations, enterprises, and movements grow.
John Wesley, the founder of the Methodist Church, once gave a popular talk called ‚??The Sermon on Wealth.‚?Ě ¬†According to Wesley, the mission in life was three fold:
Work all you can.
Save all you can.
Give all you can.
The Social Security Pledge is a great way to live up to John Wesley‚??s sermon.