Wednesday, January 20, 2016

Social Security is misunderstood

There are any number of Facebook posts from people complaining about Social Security. But they are complaining about the wrong things.
Social Security is a Ponzi scheme and will go bankrupt unless something is done.
But the whining about calling it an "entitlement" is pointless. It is an entitlement, just like your paycheck is an entitlement. If you are in the program you are entitled to collect a pension after you retire.
Entitlement is not a synonym for welfare, which apparently is what some of these people think.
The problem with the program is the same as with any Ponzi scheme. At first many people were contributing and only a few were drawing money.
Today it is just the opposite. Where there were once 15 people paying in for every retiree, today there are two people contributing for every retiree. Making it even worse is the fact that people live much longer.
The other complaint is that the government "borrowed" the money.
When SS ran a surplus, what were they supposed to do? Invest it? Do you really want politicians playing the market with your money?
They could have let the cash pile up in a vault, I suppose, but I'm not sure what that would have accomplished. They were still spending more than they were taking in overall, and the deficit would have to come from somewhere or the debt would have gone up even more.
The problem can be fixed. What is lacking is the political will.
But people need to understand how the system works in order to fix it.
The easiest and most obvious fix is to raise the retirement age. It is unrealistic, given the rise in life expectancy.
If you want to retire earlier, save your own money and retire when you want.
Liberals deserve the blame, not necessarily for beginning the program but for greatly expanding it without bothering to make it sound, and for refusing to act now.