The Tribune Democrat, Johnstown, PA


April 3, 2013

George Hancock | What are your Social Security plans?

— Preparation is key for any successful venture. A runner seeking the finish line must prepare for the rigors associated with road racing. This preparation includes daily training, maintaining a healthy diet and using the proper running equipment.

A prepared athlete can have a successful running career. The unprepared in any endeavor face monumental tasks. There’s an old maxim that truly fits this thought train: “There’s no such thing as a free lunch.” Every opportunity has some cost associated with the end result.

American workers face a disturbing trend. Most employers no longer offer a pension plan. Lucrative pension plans have disappeared from most fringe benefit packages. Actually, even poor pension plans have slipped away.

My first supervisor at Pitt-Johnstown was a financial guru. He meticulously studied retirement plans and trends. He followed the markets while studying economic propensities. He asked questions. He prepared for the future.

This supervisor also shared his knowledge. He was not a retirement counselor. He stressed that everyone needs a retirement plan. Each individual must create a plan based on his or her specific needs. This plan requires lifetime preparation, diligence and savings. The end result is a fruitful retirement.

My former supervisor gave me sound advice. The university pay raises were always small. But the raises were constant, appearing every year in minimal amounts. The idea was simple. Take a percentage of that raise every year and place it in a retirement plan.

I followed his advice and created a nice nest egg.

This is not an easy plan. Prices, inflation and the cost of living have escalated during my university years. Today, skyrocketing gasoline prices severely crimp discretionary income. However, funding a retirement plan even in small increments is a wise investment.

Most workers are now expected to create and fund their own retirement plans.

There are numerous 401(k) plans available. Some employers, such as mine, offer participating employees various levels of matching contributions. An employee is expected to contribute a certain amount from his or her wages. The employer then either matches that figure or contributes a higher amount.

These employee-based plans require serious research. These plans also necessitate lifelong preparation. Successful retirement requires a well-funded plan. The golden years turn ugly if one depends solely on that other income source. 

Of course, that other income source is Social Security. The Social Security program has amassed numerous perplexing issues. Many individuals depend solely on this program. Social Security payments are their only income source.

Politicians wrestle with this historic program. Social Security cannot continue without significant adjustments. Our politicians need to balance the expectations of current recipients with those of younger workers.

President Franklin D. Roosevelt signed the Social Security Act into law on Aug. 14, 1935. The reason behind the Social Security program was simple: The poverty rate among seniors was more than 50 percent.

Old age, poverty, declining health and unemployment were crippling the senior population.

Our elected leaders realized the situation was dire. Social Security was created to ensure seniors a monthly payment based on years worked.    

Critics railed against Social Security from the beginning. Opponents argued the government had no business creating a senior entitlement program. Critics called Social Security a socialist program.

Here is the bottom line about Social Security: This is a mandatory program. We cannot opt out. We must participate. Workers have paid into the system for decades. We expect that monthly payment upon retirement. 

My generation is creating an interesting trend. Employees, including myself, consider retiring or do retire at age 62. Many financial planners claim this is a mistake. These analysts believe one should work until their full retirement date.

A recent online news report about this thought drew 150 responses. All 150 responders would or did retire at 62.

When we study those Social Security payment figures from ages 62 through 66, the difference for many workers is minimal. The real difference occurs at age 70. But, few wish to work that long.

Social Security reform is needed. Congress did not prepare for the future. However, many individuals did. Those hearty folks plan to trot off into a golden sunset.

George A. Hancock of Scalp Level Borough is an occasional contributor to the editorial page.

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