- The Washington Times - Thursday, March 22, 2001

Investors and workers near retirement still think that, despite the market downturn, it's a good idea for people to invest some of their Social Security benefits in stocks an option President Bush says Americans should have for retirement.

To help save Social Security from projected bankruptcy in 2038, Mr. Bush says, younger workers should be allowed to put some of their retirement taxes in stocks. The theory is that they would get a return on their investment that's greater than what the government can provide.

James Martini's dream of an early retirement faded quickly after he lost most of his investments in the stock market, but he wasn't scared away entirely.

"I like the idea of being able to manage at least part of my own money," said Mr. Martini, 58, of Grand Forks, N.D., who runs a brain-injury program for the state. His investments lost half to two-thirds of their value in the past year alone.

Mr. Bush hasn't said what portion of the 12.4 percent Social Security tax should be used for private investments, though the most widely discussed option is for two percentage points.

The president proposed partial privatization of the government retirement program in heady days for the stock market, when the Dow Jones Industrial Average hovered near 11,000.

Since his announcement May 15, the Wilshire Associates Equity Index which represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq issues has lost $2.7 trillion and was worth $11.75 trillion at the close of trading Monday.

Given that, some say Mr. Bush should delay proposing the plan or even abandon it.

Mr. Bush told Congress last month he would name a presidential commission this spring to recommend changes to Social Security by fall.

The market drop "underscores the uncertainty and risk" of individual accounts, said Robert Reischauer, president of the Urban Institute, a liberal-leaning think tank.

Mr. Reischauer, a former director of the Congressional Budget Office, said the market's behavior "should cause many to question whether the basic retirement pension for America's elderly should be one that fluctuates with market values."

Others note the general view of stocks as a safe, long-term investment and say private accounts could help prod the 40 percent of workers who have yet to begin saving for retirement.

"A personal retirement account isn't day trading," said David John, a senior policy analyst at the conservative Heritage Foundation. "The key here is making an investment and sticking to it."

That's a point Mr. Bush needs to make when selling the plan, he said.

"The roller coaster gets a little scary at times, but it always ends up in the right place," Mr. John said.

Richard Thau, president of Third Millennium, an advocacy group for people ages 25 to 35, says the accounts will help millions of young workers begin to save for retirement.

A recent Employee Benefit Research Institute survey showed that half of Generation Xers had saved less than $9,999 for retirement. It also found that more than 40 percent of all working Americans had no money stashed away for that purpose.

"The debate is far more about taking advantage of long-term investing starting at a young age than it is simply about reforming the Social Security system," Mr. Thau said.

Polls taken before the market drop reflect a public generally in favor of a Social Security investment option, with nearly 60 percent supporting the idea. That support softens, however, when respondents are told some risk would be involved.

"The stock market is a gamble, and I don't believe that the common person is capable of that kind of planning," said Victoria Carson, a Chicago teacher who was visiting the nation's capital with students on Monday. "It's a rare person who can really make a killing and really do well.

"That's why Social Security was set up. If everybody could make a fortune and take care of themselves, they would," she said. "I think we have to take care of that part of society that isn't able to do that."

Mr. Martini, who wouldn't be able to participate because he is too close to retirement, said he would rather invest for himself and "take a chance that the returns were going to be better than they would be without investing in the market."

He said Mr. Bush should let the market settle before going ahead with the plan.

"The market is driven so much by emotion," Mr. Martini said. "I think it's just got to be a continual long-term sell that 'This is good.' "

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