- The Washington Times - Thursday, March 17, 2005

Sometimes the best way to effectively make a point is to state the obvious. If America is to continue flourishing as the land of opportunity, we must offer everyone an equal chance to invest and save in today’s economy.

Savings and investment are avenues to improving one’s financial standing over time while simultaneously building assets and wealth. Millions of Americans are precluded from this avenue because of limited resources.

One way to offer this opportunity to millions of middle to low-income Americans is by letting them invest part of their payroll taxes in personal retirement accounts.

These simple truths are especially important now because all kinds of claims and counterclaims are being tossed about in the Social Security reform debate.

Much of it is based on technical data, requiring us to understand everything from the “rate-of-return” concept to the value of the U.S. Treasury securities in the Social Security “trust fund.” But even the so-called experts can’t agree if the trust-fund Treasury securities are assets or liabilities.

While these experts debate everything from the extent of the problem to the semantics of solving it, the bottom line for most African-Americans is much more straightforward.

A high percentage of African-Americans workers fall into the low- and middle-income categories. As a result, they have little discretionary income, which means they are much less able than others to accumulate private retirement savings in 401(k)-type savings plans.

When a worker with limited resources must choose between paying the monthly bills, dealing with other pressing household matters or saving money for retirement, the bills and household matters will certainly always come first.

This means most African-Americans have far less to pass on to their children and grandchildren when they die. Instead of building family wealth that might be used one day to start a small business, African-American families often have very little to pass on other than bills for “final burial expenses.”

And if this stacked deck isn’t bad enough, under the current system African-Americans are far less likely than other workers to collect Social Security benefits for an extended time, because their life expectancy is lower.

An African-American high-school graduate who earns middle-income wages for the next 45 or 50 years will pay more than $700,000 in Social Security taxes. With his lower life expectancy, he will probably collect only about $140,000 in retirement benefits, for a net loss of more than $500,000.

This grim reality will affect some 7 in 10 African-Americans: They will receive less in Social Security benefits after they retire than they paid in during their working years.

That’s because half of all 20-year-old African-American men who enter the labor force will die before they get back even three years worth of Social Security benefits, according to the National Center for Health Statistics.

This should make the president’s proposal to modernize Social Security by including personal retirement accounts a viable option among African-Americans.

Wealth is built over time and by having the chance to invest in the future. Many who vehemently oppose the president’s proposal allegedly on behalf of the less fortunate, have the safety of their IRAs, 401(k)s and other investments to look forward to upon retirement. Perhaps if they faced the prospects of those they claim to protect from reform, their opinions would change.

Let’s hope that in the midst of the wide-ranging debate over Social Security reform details we don’t forget the simple point that for millions of Americans Social Security reform makes sense — and dollars.

Alvin Williams is president and chief executive officer of BAMPAC, Black America’s Political Action Committee.

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