Social Security a Gov Ponzi Scheme

Most informed people understand that Social Security (SS) is just a legal pyramid scheme perpetrated on the working folks of America. The workers of today pay 12.3% of their gross wages (half of this paid by the employer) into SS. This money goes to pay the benefits of todays retired workers. When the system started there were about 16 young workers paying into SS for every 1 retiree. Today there are about 3 workers paying into the account for every retiree. Some day, if the system is not changed, theoretically, this figure could drop to one worker for every retiree. How would you like to pay your own family's bills and then be personally responsible for paying for the retirement of someone else.

More money is going into this system than is being spent today. The amount that is in excess of what is needed to pay the current retirees, goes into what is called the SS Trust Fund. All this is, is a bunch of T-Bonds (Treasury Bonds). What are T-Bonds, well they are obligations of the Federal Government. You can go down to your bank today and buy some if you want a low, but safe return on your money. The Trust Fund has been growing since 1983 or so when SS taxes were raised. The Fund will be in positive balance until, some say 2018, some say earlier, say 2008.

THEN WHAT HAPPENS? The government must use the built up surplus (T-Bonds) to pay some of the benefits of the then existing retirees. The problem is that to get the cash, the government must go out and TAX the people, or borrow more (sell new Bonds to investors who may or may not be Americans). Either method is not good for our economy. The debt of the government rises. Taxes must go up or benefits go down some way to pay for this mess. Since raising taxes hurts the economy (takes money out of your pocket now as a worker), benefits will probably go down! Or, the retirement age will go up.

A very important fact is overlooked in this discussion by most government lovers. The SS surplus (Trust Fund) is counted as part of the government's yearly income (taxes and such). This makes the deficit look better than it really is. If it was not part of the equation, the deficit would look REALLY bad (you know; the truth).

The answer: The Democrats want to raise taxes and the Republicans want to cut back on government spending.

A better solution is to have young workers put some of their SS taxes into an individual account that THEY WILL OWN. Yes, like a forced IRA. And like I talked about a couple of Blogs ago, this account will provide a much better return than SS does now, as shown through its history! And MOST important...you will own it. You can use it in retirement and when you die, it will be passed on to your kids. Social Security, on the other hand, ENDS when you die. And in the event you die before you are 66 years old. All your investment is gone!