It’s a popular lament on the right that Montgomery (Maryland) and Fairfax (Virginia) are the two richest U.S. counties in an income sense. Each abuts Washington, D.C. Get it?
The above question isn’t meant to demean correct frustration with the size of government, but it is meant to show the limits of high, frequently government-funded incomes when it comes to achieving wealth. While Montgomery and Fairfax are surely dense with high earners, the wealth in each county comes nowhere close to what is found in and around New York City, Los Angeles, San Francisco, and for that matter the Maryland and Virginia counties farther from Washington, D.C.
Which is just a reminder that a nice income is great, but it’s not equity. Equity is the path to substantial wealth, and to retirement defined by greatly reduced money worries.
All of which raises a basic question: why won’t either Republicans or Democrats touch Social Security? Forget for now and forever all the nonsensical talk of its looming insolvency. What a laugh. The fact that’s there’s no “cash” sitting in the Social Security “trust fund” is the surest sign that no one needs to worry about ever missing a payment: while the federal government spent excess Social Security collections from the past, it will cover out of general revenues what the system doesn’t collect in the future. The cash payments are safe. Which is the point, or should be to future Social Security recipients.
Why would they want it? Wouldn’t they prefer the freedom to exit the federal government’s income plan?
About the question, implied within it isn’t a desire to reform Social Security. There’s no reason to at this point. Whether right or wrong, the politics of reform or ending Social Security are a total waste of time.
Much better than reform would be freedom from Social Security. Call it Social Security Choice, or simple freedom to opt out of a forced savings program from the federal government that is even less than forced savings. The latter implies ownership of a Social Security account which constitutionally (Flemming v. Nestor) doesn’t exist as is.
The much bigger shame with Social Security is that it’s forced savings sans any kind of equity component. Translated, W-2 earners pay a little bit more than 6 percent of each paycheck (as do their employers) in return for income in the future, with a little more than $5,100/month their best income possibility assuming they’ve done everything right. What an AWFUL deal.
To see why, just ask a basic question about what you’d do as an investor with 6 percent of each paycheck earmarked for savings: would you keep it in cash or gradually increase your equity exposure? It’s a waste of words to ask the question. And since it is, no words will be wasted comparing cash versus equity returns over time. What an insult to reason comparing cash to equity. The former involves stockpiling government issued notes fully aware of how governments have devalued money over the millennia, while the other involves exposure to the very people who drive all wealth creation.
Which brings us back to Democrats and Republicans. Why are both so afraid to legislate the right to choose among their constituents? The question staggers the mind, and can be answered by Montgomery and Fairfax counties. Income is great, but wealth can be found in equity. Why won’t politicians allow their constituents the right to generate true retirement wealth with their income?
