Today I turn 65 years old — the age when most Americans start thinking about retirement and signing up for Social Security and Medicare.
In the early 1980s, I burned my Social Security card at the New Orleans Investment Conference (see photo) in protest of the state pension system. Social Security is a lousy retirement program that forces the working poor to pay high payroll taxes, prevents them from saving, and has left the nation with over $8 trillion in unfunded liabilities that (along with Medicare) could bankrupt us in the next 20 years.
I have always tried to live up to the words of Benjamin Franklin, who taught us the virtues of industry, thrift, and prudence in his booklet “The Way to Wealth.” By following Franklin’s trinity of virtues, I’ve been able to build up a sizable net worth and multiple sources of retirement income (company pension plan, IRAs), so that I don’t really need Social Security to live off of.
And even though I’ve reached retirement age, I still plan to work — writing my investment newsletter, speaking at conferences, publishing books, and producing conferences like FreedomFest.
So, over the past year I’ve pondered two questions:
1. Should I sign up for Social Security?
2. What should I do with my monthly Social Security check?
I’ve asked several friends for advice, and about what they do with their Social Security checks. Many need them for daily living expenses, but a surprising number told me they don’t know what to do with their monthly checks. They’re deposited automatically into their bank accounts and either sit there or go into savings accounts that earn very little interest.
It got me thinking: Can Social Security payments be used for a good cause?
I thought back to something my wise old uncle Cleon told me when he turned 65 in 1978. He said he could use the extra monthly income of $650. After all, he had earned it during his working years. It had been deducted from his paycheck and set aside for him (theoretically at least) in the Social Security trust fund. It was his. So he went down to the Social Security office in Salt Lake City and signed up.
But instead of spending the money on daily living expenses, he signed over the monthly check to his favorite cause, The National Center for Constitutional Studies. He loved teaching Americans about the Constitution and how to preserve it. Through NCCS, he traveled the country giving constitutional seminars to patriotic Americans, and used the Social Security checks to pay for some of his expenses.
Following in my uncle’s footsteps, I’ve decided to sign up for Social Security. Since I don’t need the money to live on, I’ve decided to invest my monthly government check in a variety of good causes. Based on my past earnings, I should receive a check of around $1,800 a month, automatically transferred into my bank account. From there, I’ve instructed the bank to send a check or wire every month to my various causes. It’s that simple.
Many of you may have heard about Warren Buffett and Bill Gates’ Giving Pledge, where billionaires have pledged to donate the majority of their fortunes to charity.
I’ve come up with a similar idea, except this one applies to more people and is something you can do when you are alive: the Social Security Pledge. If you are wealthy enough, you can invest part or all of your Social Security proceeds in a favorite charity, foundation, church, synagogue, or other good cause. You don’t have to limit yourself to giving to non-profit organizations that are tax deductible. You can give your Social Security check to any organization, public or private, or to individuals. You can donate it to your favorite political party. You can give the funds to a student scholarship — for your grandchildren, for example — or to somebody who has a medical need. Or you can invest your government check in free enterprise. Buy shares in individual stocks or mutual funds. Or, better yet, fund inventors who could use the money to advance their work.
There are lots of possibilities. Be creative and have some fun with it. Don’t let the money sit there. Put it to good use!
Banking technology has made it simple and efficient to invest in good causes. Use an online banking service. Make a list of how much money you wish to give to each organization or cause, so that donations equal your monthly Social Security check, or whatever amount you feel comfortable giving. Then inform your bank of the names and addresses of the organizations and how much you wish to donate to each. Your bank will do the rest by automatically sending the organizations a check each month. You can change the organizations and amounts whenever you want. It’s that simple.
The Social Security Pledge has enormous potential to help charitable organizations, enterprises, and movements grow.
For more information, visit the website I’ve created: SocialSecurityPledge.org.
John Wesley, the founder of the Methodist Church, once gave a popular talk called “The Sermon on Wealth.” According to Wesley, if you take the following three steps in life, you will be eminently successful:
1. Work all you can.
2. Save all you can.
3. Give all you can.
Notice he didn’t say, “Spend all you can.” Too many Americans have gotten in financial trouble by overspending and getting in over their heads in debt, so that by retirement time at age 65, they need Social Security because they haven’t saved enough in their company pension plans or individual retirement accounts (IRAs). Or they have to keep working to survive.
As retirees, we can make a difference.