Are You Ready to Work Until You Die?
By Mark Nestmann — April 20, 2018
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Social Security suffers from a fundamental problem: it’s a Ponzi scheme, referred to in more polite company as a pay-as-you-go system. Benefits aren’t banked for payment to the persons who earned them. Rather, like a Ponzi scheme, early “investors” have first access to the funds. The so-called Social Security Trust Fund doesn’t exist, at least not in the form most people believe it does. It represents only an entitlement to future benefits, financed by future payments from workers.
Ponzi schemes work as long as the numbers of persons paying into the system and those receiving payouts stay in the same approximate proportion. The proportion of people paying into the Social Security system to beneficiaries is now at a historic low. And in the next 25 to 50 years the ratio will go even lower. In 1960, the worker-to-beneficiary ratio was 5.1:1. In 2005, it was 3.3:1. In 2020, it will be about 2.6:1. It is projected to be 2:1 by 2060.
Unfortunately, even that projection is optimistic because millions fewer workers will be paying into the system than even the most pessimistic scenarios estimate. Researchers at Oxford University estimate that a stunning 47% of US jobs could be eliminated in the next two decades.
Bridging the enormous gap between the benefits promised to retirees and the resources available to meet those promises requires a long-term infusion of trillions of dollars. The Board of Trustees for the Social Security Administration (SSA) publishes an annual report on the sustainability of Social Security benefits. In 2012, the board projected that full benefits could be paid through 2038. In 2016, the board projected Social Security would be insolvent in 2035. Meanwhile, the Congressional Budget Office, a non-partisan federal agency, projects an insolvency date of 2029.
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That’s the problem with Gooferment. It makes promises that it can’t keep.
I remember my family discussing many things but Social Security was described as the sacred cow of FDR. My uncles blamed it for breaking up families by permitting old people to move to Florida.
Only later, in college economics, did I realize that Social Security was a “plot” to transfer wealth from poor minority men to rich white women. Conspiracy Theorist supreme! It also deprived the poor of their only asset that they accumulated that should have been left to their heirs.
Even later, I heard about Chile who privatized their “social security” system and turned it into a national asset of capital formation. I attributed their success to the fact that the population was illiterate and the designer made it brain dead simple with strict rules and animal logos. While the people may have been illiterate, they certainly understood it was their money.
Where is “We, The Sheeple” DEMANDING “social security” reform. If MetLife did what the Congress has done, then all the executives would be in jail.
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