If system changes, here's what happens
(Sioux Falls, S.D.) Argus Leader
The battle over how to keep Social Security solvent will focus on a proposal to let workers invest some of their payroll taxes in stocks and bonds.
Question: What has prompted the push to change the Social Security system?
Answer: The program will start to run in the red in 2018, paying out more in benefits than it receives in payroll taxes.
Q: What are the options?
A: Four main ones: Increase payroll taxes, reduce benefits, shift money from other government programs into the Social Security Trust Fund or introduce personal accounts to reduce what Social Security would have to pay workers after they retire.
Q: How would personal accounts work?
A: Rather than sending all their payroll taxes into the system, younger workers could divert some of that money into government-supervised stock and bond accounts. They would own these new accounts and have a say in how the money is invested.
Q: Isn't the stock market risky?
A: There are no guarantees in the market. That's why personal accounts would supplement a base Social Security benefit and why workers couldn't invest a larger portion of their payroll taxes.
Q: Since I would own the account, could I take money out if I needed it for something else?
A: No. Your money would remain in the system. Social Security is designed as a stopgap, not a way to wholly cover expenses in later years.
Q: If Congress approves a personal account plan, would I have to invest payroll taxes?
A: No. You could do nothing and allow the government to continue investing your full Social Security withholding.
Q: How can I learn more?
A: Take some time to educate yourself on the basics of the stocks-and-bonds market. Local bookstores have resources to get you started, including "Personal Finance for Dummies" and the Motley Fool series. Consider sitting down with a certified financial planner.
Q: What are Congress and the president doing about Social Security?
A: Letting workers invest some of their Social Security taxes in the stock market is a top priority for President Bush. Some Republicans in the House and Senate will introduce legislation to accomplish that. Democrats oppose the move and have come up with various alternatives.
