WHAT IF SOCIAL SECURITY DIDN'T EXIST?

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

We sometimes forget that retirement is not a 20th century invention. With the relatively recent introduction of IRAs, 401(k)s and pensions, it's easy to lose sight of the fact that people have always looked forward to, and planned for, retirement.

In fact, 2,000 years ago, Roman statesman Cato the Elder wrote, "Cessation of work is not accompanied by cessation of expenses." Apparently, people have been pondering their retirement income since ancient times.

Our ancestors worked, raised families, educated children, owned property and retired -- and they did it without the benefit of Social Security. Only in the past 60 years have we come to rely on Social Security for our retirements. The fact is, for generations, people's nest eggs were entirely home grown.

For a moment, let's assume Social Security did not exist. How would you fund your retirement?

First, without the mandatory Social Security deductions, you'd have a bigger paycheck to work with, but it doesn't take a lot of money to save a lot of money.

Look at what you could do with just $5.50 a day. That's all it takes to make a $2,000 annual deposit into an IRA. Many people turn that $5.50 a day into a monthly deposit of $167. Some prefer to pay themselves first and have the amount deducted from their paychecks each month. Whichever option suits you, almost any American worker can save in this way.

It's easy to see how small doses of saving can amount to a comfortable retirement income when you play a little game of "what if."

What if, over a 20-year period, a responsible worker invested $2,000 each year and averaged an 8 percent return annually (this return is for illustration purposes only and is not indicative of actual returns currently available)?

Each April 15, this worker would file his income tax return and also pay himself $2,000, which he then invested. At the end of 20 years, his account would have totaled $100,479.

What if, instead of waiting until April 15 to invest, our hypothetical worker invested his $2,000 every Jan. 1? The total value of his retirement account would be $111,124. those extra months of compounding added $10,645 to his account.

So, with just $5.50 a day, our American worker accumulated more than $111,000 for his retirement nest egg, and he did it without Social Security.

This what-if story has a happy ending for two reasons: First, our worker took his future into his own hands. Second, he needed only a little money and a lot of time.

You can accomplish similar results. Each year, working Americans dedicate millions of dollars to personal retirement plans such as IRAs or 401(k)s because of the limitations and uncertainty of Social Security. They realize that, historically, personally investing in the future of American enterprise is a surer approach to a secure retirement.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.