Today, I turned 65 years old, the traditional retirement age. 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 (www.freedomfest.com).
Now the question is, Should I sign up for Social Security?
Back in the early 1980s, I burned my Social Security card at the New Orleans Investment Conference in protest of the state pension system created by Franklin D. Roosevelt in the 1930s. I consider it a bad social program for a variety of reasons — it’s universal instead of just for those who need it; it imposes a huge payroll tax (now 15%) on the working poor, keeping them from saving money; and it overpromises retirees, creating more than 8 trillion dollars in unfunded liabilities.
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. While everyone can use a little extra cash, I don’t really need Social Security.
Following the Austrian defense of saving as an economic virtue, 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” advocated by Benjamin Franklin in “The Way of Wealth.”
Occasionally, students at universities or investors at conferences where I speak ask me, “What is the secret to financial success?” I always answer that it takes three things:
1. Hard work
2. A regular savings program/living within your means/staying out of debt.
3. Investing your savings wisely in a business or the stock market.
I’ve tried to follow this advice all my life.
Now, at age 65, I wonder:
1. Should I sign up for Social Security?
2. What should I do with my monthly Social Security check?
To answer these questions, I’m reminded of John Wesley’s famous “Sermon on Wealth.” According to Wesley, to be successful in life, you should:
Work all you can.
Save all you can.
Give all you can.
So, I’ve decided to take the Social Security Pledge. What is it?
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 you 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% or 100% 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 a new website, www.socialsecuritypledge.org.
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 each charitable organization 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.
Yours for peace, prosperity and liberty, AEIOU,
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“You Blew It!”
Are Both Obama and Romney Protectionists?
At this week’s presidential debate, one thing became clear. Both Messrs. Obama and Romney need a refresher course in basic economics, especially with regard to trade policy. Since I have a Ph.D. in economics and have taught at Columbia University, among others, I am happy to provide a bit of guidance free of charge to both candidates.
Each candidate claimed that the United States could be harmed by inexpensive imports from China, especially the popular notion that we are “exporting jobs” from America. Mr. Romney promised to impose tariffs and increase the price of Chinese-made goods to Americans to stop the drain of manufacturing jobs. And Mr. Obama bragged that he “saved a thousand jobs” with his “tough” trade action that ensured “that China was not flooding our domestic market with cheap tires.”
Both presidential candidates violated the “one lesson” of economics, as Henry Hazlitt and, before him, Frederic Bastiat taught: to examine both the direct and indirect effects of a policy, to look at the short-term and long-term effects of a policy (see “Economics in One Lesson” by Henry Hazlitt).
Restricting and raising tariffs on cheap Chinese imports does protect domestic labor, but it raises the price of goods to consumers, so they have less to spend. Cutting tariffs and encouraging cheap imports benefits consumers, who then have more money to spend on other goods and services, and therefore can stimulate new jobs and businesses in America. Free trade is a win-win situation, as has been proven recently by the NAFTA agreement with Mexico and Canada. Opening up markets to foreigners may in the short run hurt jobs in a given area, but it creates new jobs in other areas in the long run. Foreign automobile companies have created all kinds of new jobs in the United States. Toyota and BMW building plants in the United States are two examples.
I do applaud Mitt Romney’s support for more free-trade agreements with Latin America. He should expand it to all nations.