The system's a pyramid scheme. It was set up on the assumption that there would always be at least a couple times as many productive workers as retirees. Now that people are living longer and having fewer kids, it's thrown off the ratio.
The baby boomers just happened to be the first generation to have so few kids, and the rest of us are having too few kids for the system to work, too.
I've long since given up on hoping for Social Security to be there for people my age. Neither me nor my brother will see a dime.
Though retirement wise both me and my brother can serve in the military for the next 20-30 years (Me Army, him Air Force) and have a guaranteed retirement that cannot be shirked or shillied off.
Well, if you set up a Ponzi scheme so that only a very small percentage of people actually get to claim their returns, is it still a ponzi scheme?
Fight smart, not fair.I think a better analogy is insurance.
People pay into a Ponzi scheme because they expect to make money. People buy insurance expecting to lose money, in order to protect themselves in the event bad stuff happens.
Blind Final Fantasy 6 Let's PlayIt's also worth pointing out that in a real Ponzi scheme, there's fraud involved. You think the return on your investments comes from the returns on the fund's assets, but it's actually just other people paying into the scheme. On the other hand, pretty much everyone realizes how Social Security works.
^^ Actually the only reason SS has investments is because of the surplus due to working baby boomers. It's intended to be balanced each year so no investment or loans are needed, but demographics kind of screwed that up.
Blind Final Fantasy 6 Let's PlayThe basic problem: when they created Social Security, the average life expectancy was around 60 years old for men and 65 for women. Many people never drew any benefits, and those that did only got it for a few years. Now life expectancy is closer to 75 for men and 80 for women.
All this misinformation about Ponzi schemes just obscures the facts. The Giant Wind Machine pushes to privatize Social Security for two reasons: to tear down everything FDR accomplished and to let Wall Street loot the Treasury again, this time for a trillion instead of a few billion.
Here's an idea: when people are ready to retire, sell them survival kits and send them to some remote location. They're no longer useful profit centers, so they don't matter. Then we can abolish Social Security, pension funds, and a big chunk of Medicare.
Under World. It rocks!^ Except it is a Ponzi scheme. Every dollar I pay in today, pays somebody else. I never see that dollar again.
Were I of retirement age, the stuff I collect isn't what I've paid in over the last 45 years. It's the present pay-ins from current workers.
If that's not a Ponzi scheme in function what is?
^^ Do you have any information about life expectancy at retirement age? Life expectancy at birth isn't a useful figure because extreme infant mortality rates in the past made it artificially low.
^ You do understand the concept of insurance, right? When you get a payout, it doesn't come from your past premiums, it comes from the premiums of everyone who payed that year. (Plus investments, loans, etc.)
edited 27th Jan '11 8:08:21 AM by storyyeller
Blind Final Fantasy 6 Let's PlayThe problem isn't that Social Security is not or could not remain solvent. The problems are several, and none is as simple as "Social Security sucks".
The first and most immediate problem is that although the Social Security Trust Fund was set up as an investment scheme, the funds in it are somewhat mythical. The reason is because Congress long ago began borrowing against it for general revenue. In theory, there's this huge balance of funds collecting interest from the Federal Government. In practice, because we've already "spent" that money, it's actually coming out of tax revenue. So not only is the government paying out benefits, it's paying back the money it borrowed from itself. Techically, this is the "Ponzi scheme" referenced by Tom, and it is a problem, and it is something that we can indeed blame Congress for.
The second problem is of course the imbalance between payroll taxes coming in and payments going out. If the "trust fund" actually existed and were collecting interest, it wouldn't be so bad, but now the imbalance has to be drawn against general revenue instead of artficially propping it up.
Another solution is to raise the retirement age and/or lower benefit payments, but that's a political hot potato that nobody wants to touch because of the very significant elderly voting block. Retirees have time to be politically active, after all, and you do not fuck with the elderly if you want to get [re]elected.
There's also the economic crisis to (partially) blame - the system depends on payroll taxes coming in from new workers; you have to add new people to the system to balance out the increasing outflow on the far end. Well, the recession has been particularly hard on those young would-be workers. We're also living longer as noted.
So it's not a simple solution - or rather, the things we can do that would actually help fix the problem are already either way past the point where they'll be effective (reclaiming the borrowed revenue for the trust fund would massively increase the federal deficit) or so politically unpopular (raising retirement ages, raising payroll taxes, lowering benefits) that neither Republicans nor Democrats can afford to vote for them.
Edit: I still find it amusing that Medicare, Medicaid, and Social Security, programs Republicans vehemently opposed, are now on their list of things to lambaste Democrats over trying to reform. Have you no shame or sense of your own hypocrisy? From a strictly conservative point of view, it would seem like a great way to lower the costs of these programs would be to just let the elderly starve and/or die of disease. Unless they're rich.
edited 27th Jan '11 8:50:35 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"Or unless they have some unique knowledge to share. You'd be surprised how much stuff is legacy equipment that nobody still working understands.
Fight smart, not fair.Well, that elderly person had better hope that his job pays him well enough to afford quality medical care. Or that he has a quality retirement plan. Because heaven forbid any government money goes toward supporting him.
Edit: Or perhaps it's even worse - do we make the litmus test for government support "having useful skills to impart?" What message does that send about the value of a life? "We care about you only in as much as you have money or useful skills, otherwise die or something, we don't give a crap."
edited 27th Jan '11 9:19:40 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"Okay, so the vibe I'm getting here is due to irresponsible borrowing against the fund (raiding the piggy bank), it is now pretty much broken as a system.
Question: If it had been left well enough alone, would it have worked?
In a similiar vein, We have a Hurricane Relief Fund in Hawaii. Gee, haven't had a hurricane hit the main islands since '91, so we can chisel a little off the top here and there, right...? God forbid we get slammed and there's not enough funds in there to cover the cost of recovery. Wait, I rescind that, LET a hurricane hit so that when the fudn is insufficient, the people responsible for raiding it can watch the death of their political career.
Happiness is zero-gee with a sinus cold.

Grabbed this from NPR.
http://www.npr.org/2011/01/26/133253327/cbo-social-security-will-run-permanent-deficits
Supposedly, SS will run out of funds in 2037. Makes no sense, wont' all the Baby Boomers be passing on by then...?
I am confused.
edited 26th Jan '11 4:24:41 PM by pvtnum11
Happiness is zero-gee with a sinus cold.