Building our own safety nets.

Is the Social Security system really in crisis? It depends on who you ask. On one hand, there are those who project that the system is on track to run out of money as early as 2042. The officially projected shortfall: an eye-popping $3.7 trillion in today's dollars. As a solution to the problem, President Bush is pushing hard to allow younger workers (below the age of 55) the option of investing part of their payroll taxes in private accounts that can take advantage of the stock market, which can easily outperform Social Security returns of 2% a year after inflation. Others propose that the problem can be fixed through a combination of modest tax increases and a gradual reduction of Social Security benefits (for example, adjusting annual benefits to reflect longer life expectancy).

On the other hand are those who say that using the term "crisis" exaggerates the issue. They believe that the projected shortfall will not occur as long as the U.S. economy and population sustain their current rates of growth over the next 75 years. In fact, the official projections are based on conservative assumptions about economic growth that have been adjusted every year since the mid-90s. With each adjustment, the date of Social Security's impending insolvency has been pushed further into the future. Assuming continued economic growth, according to this optimistic view, the currently projected shortfall could hit in 2052, 2062, or be pushed back indefinitely.

Who's right? Only time--and politics--will tell. But the outcome of this debate is beside the point, as is President Bush's argument, long promoted by conservative think tanks such as the Cato Institute, that black Americans are shortchanged by Social Security because of our shorter life expectancy as compared to whites. Here's the real bottom line: With an average payout of only $14,000 a year, Social Security was never designed to be a major source of wealth. It was designed to be a safety net, a guaranteed source of income in retirement. None of the reforms proposed, including privatization, will change that.

The fact that Social Security could be facing imminent peril only means that we have to build our own safety nets by adopting the habits and behaviors necessary to not only finance our retirements but leave a legacy of wealth for future generations. This is the whole point of the BLACK ENTERPRISE Black Wealth Initiative and the 10 principles of the Declaration of Financial Empowerment. Adopting these principles, which include committing to homeownership, saving and investing at least 10% of our after-tax incomes, and committing to a program of retirement planning and investing, will go further than any Social Security reforms to increase and ensure the long-term wealth of African Americans. In fact, DOFE Principle No. 6: to be proactive and knowledgeable about investing, money management, and consumer issues may be the most relevant to the debate over Social Security privatization. African Americans cannot benefit from the individual investment accounts proposed by Bush without a clear understanding of the rewards--and risks--of stocks and bonds and what it means to participate in the financial markets.

True wealth-building requires that we leave more than Social Security as a legacy to our children and grandchildren. Let the Social Security debate serve as a wake-up call that, no matter what happens to the system, it is up to us to take the actions necessary to build our own safety nets of wealth for ourselves and our families. Save Social Security, but don't look to it as our primary source of multigenerational wealth.