I get frustrated sometimes. Okay pretty often, even oftener these days.
The root cause of much of my frustration is reading the nonsense posted on social media and readily passed along as 100% fact and apparently driving a great deal of public opinion. Today’s political climate is making things much worse.
Social Security is a favorite target.
What people claim, for example – Congress stole the trust money, actuaries didn’t consider some people die before collecting, the trust earns no interest – is appalling, but readily believed by so many. When I try and explain the facts, some people just won’t accept them and call me not very nice names.
My current favorite is people claiming Social Security is a scam – a Ponzi scheme – and by personally investing the payroll taxes they paid, they could do far better financially in retirement.
I bet Rick could construction such a scenario with a spreadsheet. The fact is the math could work given the right circumstances, but more likely would not work given real life and human nature.
The overriding risk is that Social Security is not just a individual pension. It is
Many people are eligible for benefits never having paid a penny in taxes, including individuals disabled from birth. And, of course, there is no relationship between the FICA taxes and SS benefits. Two separate laws in fact.
To make all this self-funding work as planned certain conditions are necessary it seems to me.
I’ll stick with Social Security and most Americans would be wise to do the same.
Now all we need is Congress to do its job and assure unlimited sustainability for the program – which is not that hard, but getting harder the longer we delay.
“I bet Rick could construction such a scenario with a spreadsheet.” Hmmm, I thought I already had? So did Dan.
Only 40 years ago, my senator came back home holding up a copy of the Social Security Amendments Act of 1983 claiming that they had saved Social Security for all time.
However, so long as Congress can buy votes by promising favored constituents more benefits while sending the tax bill to the not so favored, or to people too young to vote and/or generations yet unborn, and so long as Congress keeps running $~2 Trillion in annual deficits (while SS and Medicare trust funds are invested in government debt instruments), SS & Medicare will continue to be viewed by many as quasi-Ponzi schemes.
Most recent example was President Biden’s sign off on the “Social Security Fairness Act” where elimination of the Government Pension Offset will increase Social Security benefits paid to certain government workers who already receive taxpayer funded pensions while sending the bill to American taxpayers, most of whom have no pension plan.
I agree. It seems that most of the people arguing for investment are the ones looking back, so as usual, hindsight is 20/20. It would probably only work if 1) you got extremely lucky with your choice of investments, or 2) it was a mandatory investment into mutual fund type of investment. Do you choose the stock or bond option? What combination/percentage of each? These options were very new when I started working a long time ago.