Dang, he did it again. Just take a look at that. I work all week, slaving over a hot keyboard, and Uncle Sam has taken 6.2% of my paycheck to fund someone else's Social Security check. The Motley Fool, as my employer, had to kick in an additional 6.2%. My wife, who's just starting her own business, will have to pay the entire 12.4% of her income.

In case you didn't know it, most of those taxes taken out of Americans' paychecks don't go to a piggy bank. They go to today's beneficiaries. Sure, some of it goes into the so-called trust funds, but the Social Security Administration says they'll be depleted right after I retire.

Have you ever thought about what you could do with that 12.4% of your income? As for me and my wife, we'd use our 12.4% to fund a mighty big nest egg, and we'd make sure it would last as long as our retirement.

Uncle Sam doesn't trust us
OK, so those taxes aren't just for retirement. We also get life and disability insurance (sorta). If you die and leave behind a family, your kids will receive monthly checks, as might your spouse. And if you become disabled, you and your dependents will get a monthly check.

Clearly, the folks in the government don't trust that you can buy your own insurance and invest for your own retirement. So they do it for you. Which is why I hate Social Security.

Furthermore, you may never receive a cent of that money, and I'm not just talking about the strain of the retiring baby boomers. I often think of a family friend who died at the age of 65 having never received a single Social Security check. All those years of contributions, and she got nothing. You can't bequeath your benefits. I hate that.

According to the Census Bureau, the average household earned approximately $50,000 in 2002 (the most recent numbers available). Including an employer's contributions, such a household adds $6,200 a year to Social Security. Would that household be better off having that money, buying its own insurance, and investing the rest?

To answer that question, first ask yourself this: If Social Security were eliminated and every family's after-tax income instantly jumped several grand, would families rush out to their neighborhood Allstate (NYSE:ALL) agent -- or would they rush out to their neighborhood-sized Wal-Mart (NYSE:WMT)? What do you think most of us would say: "I'm going to max out my 401(k)!" or "I'm going to Disney (NYSE:DIS) World!"

Double-dang. Maybe Uncle Sam is right.

Can we be trusted?
I'm sure, dear reader, that you're a responsible person. You may be saving for your retirement, and you may be adequately insured. But perhaps you can think of a time in your life when you weren't so responsible, because of financial circumstances or just plain procrastination.

Ask yourself this: Every time you get a bonus or an income tax refund check, do you re-evaluate your insurance needs and write a check to your IRA, or do you find yourself surfing eBay (NASDAQ:EBAY)?

Individually, we're not always at our financial best. And collectively, Americans aren't known for their financial literacy and saving habits. So maybe Uncle Sam is on to something.

I know what some of you are thinking. You're thinking, "We should have control of our own money. As for those who squander their resources, tough beans. I shouldn't be forced into a government program because some people are irresponsible."

I'd be lying if I said I don't have some sympathy for that argument, especially when I calculate how much I'd have if I could invest part of that 12.4%. (Dang, dang, dang!) But there's a cost to not providing a safety net. Social Security accounts for 50% or more of the income for two-thirds of beneficiaries. It's the only source of income for 20% of the elderly. Where would they be without Social Security?

Anyway, it's too late to scrap the program now, especially with a bajillion baby boomers waiting to cash in (and rightly so). It has become a cornerstone of American retirement, which is why I spend a lot of time discussing ways to get the biggest benefit in my Motley Fool Rule Your Retirement newsletter service.

But is there a middle ground? Is there a way we can have more control over that 12.4%? Some folks think it's possible.

Personal savings accounts?
Earlier this summer, U.S. Rep. Paul Ryan (R-WI) proposed "The Social Security Personal Savings Guarantee and Prosperity Act of 2004." According to the bill's supporters, this plan would:

  • Allow workers under the age of 55 to divert a portion of their Social Security taxes to a self-directed personal account, which would offer broadly diversified bond funds, stock funds, etc., similar to the low-cost options in the Federal Thrift Savings Plan
  • Allow workers to pass on their savings to their heirs
  • Allow workers to choose to stay in the current Social Security system (making the personal savings accounts voluntary)
  • Guarantee that no one will receive less than what Social Security currently promises
  • Continue to provide survivors' and disability benefits
  • Continue to pay promised benefits to current retirees and near-retirees
  • Increase benefits for most middle-age to younger workers
  • Eliminate the impending Social Security deficit
  • Eliminate baldness and help you lose 15 pounds

Can it really do all that (except the part about baldness and fatness)?

Yes, says Peter Ferrara, director of the Club for Growth Project on Social Security and a senior fellow at the Institute for Policy Innovation, who consulted closely on the development of the bill. Mr. Ferrara told me that, over a lifetime, a worker could double his Social Security benefits by choosing the personal account and investing two-thirds of the savings in stocks and the other third in bonds (assuming historical long-term rates of return).

How would the plan pay for the benefits of the 55-and-older crowd if all this money is being diverted into personal accounts? The bill would cap non-Social Security federal spending growth over the next eight years at 3.6% rather than the current 4.6%. Ferrara (and congressman Ryan's website) point out that spending grew just 2.6% a year during the Clinton years, so it's possible. Savings realized by reducing government waste would be sent to Social Security. Also, the plan assumes that corporations would benefit from the injection of capital that would come from all these private accounts, resulting in higher profits and thus higher taxes that would be devoted to Social Security reform. The trust funds and any short-term Social Security surpluses would also play a part.

Is all this possible? According to Ryan's website, "The Chief Actuary of Social Security has already scored this legislation as achieving permanent solvency for the program, without benefit reductions or tax increases." Should we non-actuary citizens really believe it, or is this another Medicare bill that we were told would cost $400 billion over 10 years but now will cost $534 billion or more?

On that, dear reader, I'd like your opinion. Voice it on the Fool News & Commentary discussion board, or email me. I certainly like the idea of personal savings accounts, passing benefits to my kids, and Social Security solvency. But I also know that government assumptions don't always turn into reality, and I hate the idea of people having even less for retirement.

Robert Brokamp is the editor of the Motley Fool Rule Your Retirement newsletter service. Try it free for 30 days and receive the "8 Ways to Supercharge Your Retirement" special report by clicking here.