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Social Security
"...Meanwhile, about 25 percent of people think they can live on Social Security alone -
even though the program was designed to be supplemental, not the primary form of retirement income."



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Heritage Foundation: Click here for Social Security. Click here for Medicare and here for Medicaid.

Social Security Is a Terrible "Investment" - By Gregory Bresiger - ...They argue that mandatory Social Security is a poor investment because it only provides an average annual income of some $17,000. This is a lousy return on the decades of tax payments, critics contend. They say most would obtain superior returns with private investments. “Americans would be better off keeping their payroll tax contributions and putting them into private retirement accounts than having to sacrifice them to the government’s broken Social Security system,” according to “Is Social Security Worth Its Cost?,” a study by the Heritage Foundation. Social Security officials reply that the program provides value because it includes disability as well as retirement income coverage. They question how well the average person would do with a private retirement account.

   ...The Heritage Foundation found that many workers paying into the program end up with a negative annual rate of return, somewhere between minus –0.04 and –14.53 percent depending on one’s age. Younger workers with the most years to pay into the system and groups with below-average lifespans are the ones who have the poorest returns, a Heritage Foundation official says. “We are telling young people to put money into this program that guarantees zero or negative returns,” says Rachel Greszler, one of the authors of the report. Greszler notes that this is in comparison to a 4.76 percent annual return for those who have conservatively invested: half in large cap (capitalization) stocks, half in government bonds, and assuming an expense ratio of 0.7 percent. Greszler concedes that the long-term results of private investments are likely better than 4.76 percent. “We wanted to use a conservative investing model,” she says.

   ...Social Security itself, of course, should never be confused with a real trust fund, or a real saving or investment program, as can be seen in the program's dicey trust fund accounting identified by economist Murray Rothbard about a half century ago: "For the government does not invest the funds it takes in taxes, it simply spends them, giving itself bonds, which must be later cashed when the benefits fall due. How will the cash be then obtained? Only from further taxation and or inflation."

Americans have incredible misconceptions about Social Security - By Brittany De Lea - Published May 08, 2019 - Rep. David Schweikert (R-Ariz.) on the report that Social Security will run out of money by 2035 and that Medicare will become insolvent by 2026.
   ...Older Americans – including current and future retirees – appear to have a meaningful lack of knowledge about Social Security and how it can boost their retirement income streams, according to a new report from the Nationwide Retirement Institute. ...People tend to grossly overestimate the size of their Social Security checks, the results showed.  
   ...Meanwhile, about 25 percent of people think they can live on Social Security alone – even though the program was designed to be supplemental, not the primary form of retirement income. 
Only 30 percent of people know that if they don’t work for at least 35 years, their benefit will be reduced. Only a slightly higher percentage of people knew that someone earning $150,000 pays as much in Social Security taxes as a millionaire. Less than half of respondents knew Social Security is protected against inflation, while about one-third of people thought benefits are tax-free.

Social Security Fails - By John Stossel (Video here) - ...Social Security is running out of money. You may not believe that, but it’s a fact. That FICA money taken from your paycheck was not saved for you in a “trust fund.” Politicians misled us. They spent every penny the moment it came in.
...Social Security isn’t the only hard choice ahead of us. Medicare will run out of money in just eight years. At that point, benefits will automatically be cut. Social Security hits its wall in 15 years. Amazingly, as we approach this disaster, Democrats say — spend even more.
...“There isn’t enough money, even that the rich would have,” she countered (Heritage Foundation budget analyst Romina Boccia.), “to pay for the $200 trillion in unfunded liabilities.” One partial solution proposed by Heritage and others is to let younger workers put some of their Social Security money into their own personal retirement accounts. “Imagine being able to own and control your own retirement dollars,” urged Boccia, with genuine excitement. “You could invest it in businesses, grow the economy, whatever rocks your boat.”
   If history is any guide, private accounts would almost certainly pay retirees more than Social Security will ever pay. “Even a conservative portfolio of stocks and bonds that got you about a 5 percent annual return, you would make many times more,” said Boccia. She’s right. Money in government hands just sits there or gets spent wastefully; it’s rarely invested wisely. Private accounts have been tried in a few countries. In Chile, the investment they created helped make Chile the richest country in Latin America. (Before, Chile was poorer than most.)

Seven Social Security Myths - By Charles Blahous - Among public policy issues, Social Security is especially beset by myths and urban legends. These myths inhibit the enactment of legislation necessary to close its substantial financing shortfall. Press, public and policy makers alike would do well to disabuse themselves of the following widely circulated canards.
(See article for discussionon each bullet.)
...Myth #1: Social Security is not an entitlement.
...Myth #2: Social Security wouldn’t be in financial trouble if politicians hadn’t stolen and spent its money.
...Myth #3: Participants have paid for their benefits.
...Myth #4: Social Security is solvent until the 2030s, so there is still plenty of time to fix it.
...Myth #5: Because Social Security is self-financing, it doesn’t add to the federal budget deficit.
...Myth #6: Taxing rich people more by raising the cap on taxable wages will fix the problem.
...Myth #7: Social Security privatization is a live option.  crisis. 

Economist: Social Security in Worse Shape than Detroit’s Pension Funds - By Barbara Hollingsworth - (CNSNews.com July 2014) – “Social Security is insolvent,” Boston University economics professor Laurence Kotlikoff told the House Subcommittee on Social Security at a hearing on Capitol Hill Tuesday. “And it’s not bankrupt in 30 years, or 20 years, or 10 years. It’s bankrupt today.” “This is not my opinion. This is the only conclusion one can draw from Table IVB6 of the 2013 Social Security Trustee’s Report."
   "This table reports that Social Security has a $23 trillion fiscal gap measured over the infinite horizon,” noted Kotlikoff, who also served as a senior economist on President Ronald Reagan's Council of Economic Advisers. “Twenty-three trillion dollars is 32 percent of the present value, also measured over the infinite horizon, of Social Security’s future revenues.
   Hence, Social Security is 32 percent underfinanced, which means it is in significantly worse financial shape than Detroit’s two pension funds taken together.” Social Security’s debt also “swamps the $13 trillion of official debt in the hands of the public,” Kotlikoff testified. And “the system’s off-the-books debt is growing at leaps and bounds – by $1.6 trillion between 2012 and 2013 – thanks to the approaching retirement of vast numbers of baby boomers.”
   ...The economist also accused the system’s trustees of a “disinformation” campaign to keep Americans from finding out that “Social Security is in dire financial shape.” “To their great credit, Social Security’s actuaries have been reporting the system’s infinite horizon fiscal gap every year since 2002. And to their great shame, Social Security’s Trustees have been ignoring this comprehensive measure of the system’s insolvency every year since 2002.” “Unfortunately, those who proclaim the strongest desire to preserve and protect Social Security, particularly its Trustees, are doing their level best to destroy the system by ignoring or substantially understating its financial problems,” he said. Although he praised Social Security for being a “lifeline for generations of Americans who would otherwise have spent their retirements in abject poverty,” Kotlikoff testified that “nothing short of a fundamental reform of the system” will save it.

Social Security Insolvent, Voters Say 'Do Nothing' (PatriotPost.us) The main driver of the ballooning federal debtis wealth transfer payments. Indeed, more than two-thirds of the federal budget is money that goes from one taxpayer’s pocket into someone else’s. Some of this is naked wealth redistribution, like food stamps and other welfare. But much of it is what some call “earned” payments, like Social Security and Medicare – money that has been taken from workers' paychecks for decades with the promise of a retirement return. The solvency of these programs, however, is in jeopardy.
   Social Security already runs an annual deficit – about $200 billion this year – which will only grow worse as fewer workers support more retirees. From the start, politicians have raided the Social Security “trust fund” and spent the money on other general fund projects, leaving the program as a wealth transfer one instead of an investment as it’s billed. Economist Walter Williams explains, “What the Treasury Department does is give the Social Security Trust Fund non-marketable ‘special issue government securities’ that are simply bookkeeping entries that are IOUs.”
   Now that benefits paid exceed taxes collected, the problem has become acute. According to the Social Security board of trustees, in 1945, there were 42 workers for every retiree; the current ratio of three workers to every retiree is unsustainable. Strictly speaking, Social Security is not a Ponzi scheme, in part because it’s not against the law. Indeed, it is the law. (Try not paying payroll taxes – a.k.a., “investing” in the system.) But it is structured exactly like a Ponzi scheme, and it will eventually fail for the same reasons.
   Of the gap between Social Security taxes collected and benefits paid out, The Wall Street Journal’s William Galston writes, “To close that gap while maintaining scheduled benefits, we would need to enact an immediate increase in the payroll tax rate from 12.4% to 15.9%. For workers earning $50,000 a year, that would mean a tax increase of $900, nearly 2% of gross income. And employers would have to match it. For workers making the maximum now subject to payroll taxes (a bit under $120,000), taxes would rise by $2,100.”
   If the income cap were lifted, workers at higher incomes would face an even more staggering tax increase. And yet as it stands, the payroll tax is regressive in that it hits lower income families disproportionately. If the income cap were doubled, it still wouldn’t fix the problem. Galston notes, “One might imagine that such a sizable increase in covered earnings would be enough to stabilize the system for the long term. In fact, the CBO calculates, it would reduce the imbalance by only 30%. Indeed, eliminating the cap and taxing all earnings would solve just 45% of the problem.”
   Meanwhile, the expected return on the 12.4% in Social Security withholding from our income is practically criminal. Consider the potential return of investing 12.4% of a typical middle class income in indexed mutual funds, where decent investments would yield perhaps multiple millions of dollars over 30 years. Over a retirement span of 20 years or so, annual withdrawals could be six figures while still leaving a good chunk of change making money. Compared to that, Social Security looks like the poorest investment ever concocted. In fact, from that perspective, Social Security is stealing our money by mandating that it do something for us in a worse way than we can ourselves. Or put it another way. Financial advisers often recommend putting 10% to 15% of your income toward “retirement” (whatever that means to you). The potential return on that 15% over 30 years is fantastic. Unfortunately, Social Security is already taking over 12%, while giving us miserable returns. So for savers, Social Security is costing us significant returns that we could have realized but won’t. What a “safety net.”
   In spite of the facts, Social Security has always been one of the most popular programs the federal government runs, and the overwhelming choice of voters is to do nothing to fix it – let alone returning to the constitutional norm of the federal government staying out of your retirement. So we understand politicians desperate for votes not wanting to touch this beloved system. But Social Security is built on a half-truth at best, and it’s unsustainable.

Chart of the Week: How Social Security Is Contributing to the Spending Crisis ---  Spending on the three entitlement programs could consume one-half of the economy by 2056.

Dirty little secrets by Herman Cain (3/15/2005) There are three dirty little secrets congressional Democrats don't want you to know about Social Security.

WILLisms describing our current Social Security system: The government confiscates your money, keeps it for decades, gives you back a terrible return on your money, then taxes you for the privilege.

More Social Security deceit/a> by Walter E. Williams (3/9/2005) A fortnight ago, I explained some of the congressional deceit that has become part and parcel of Social Security. ...There's more to the deceit and dishonesty about Social Security. Congress tells us that one half (6.2 percent) of the Social Security tax is paid by employees and the other half paid by employers. The truth of the matter is that all of it (12.4 percent) is paid by employees. You say, "What! It says on my pay stub that I pay 6.2 percent." Let's look at it.

Just Facts Publishes Fact-Based Analysis of the Social Security Program - Just Facts has published a compendium of objective and thoroughly documented facts surrounding the Social Security program. This original research includes scores of facts concerning one of the largest government programs in the world. Just Facts, a non-profit research and educational institute, has completed an extensive analysis of the Social Security program. With over 250 easily accessible footnotes containing direct quotations from the Social Security Trustees Report, federal statutes, vote records, transcripts, federal agency reports and other primary sources, this research places a storehouse of thoroughly documented information at readers' fingertips. Holding to strict standards of credibility, Just Facts has taken an exhaustive look at this topic and published the results at " Social Security Facts."

FYI - Congressional Pension Plan - Compare to Social Security, and consider asking your Congressmen to terminate their pension plan and go under Social Security and Medicare instead. Fewer than 4 out of 10 Americans have a pension, with an average fixed pension of $7,500 a year.

  • Members of Congress can have up to $2 million dollar pensions funded by your tax dollars,  2 to 3 times more generous then plans offered by private businesses. Ex-Senator Tom Daschle receives an estimated $96,000 a year.

  • Social Security recipients receive a 2-3% return on their tax dollars.

  • In 2005 Congress raised its pay by $330 a month while Social security COLA was 2.7%, or $25 a month increase - and about half of that will be taken away by higher Medicare premiums.

  • While their is no limit on how much taxpayer money a retired Congressmen can collect, Social Security has no "lock box," just IOUs.

  • Corrupt Congressmen found guilty of a felony or defrauding taxpayers are NOT barred from collecting their pensions. Former Congressman Dan Rostenkowski, convicted of stealing taxpayer funds enjoys a taxpayer funded pension of over $100,000 a year. Former Congressman John Dowdy went to jail for perjury, but since leaving the House in 1970 has received $1 million in a taxpayer funded pension since.

  • While taxpayers are locked into Medicare, Congressmen enjoy a taxpayer funded health care plan they get to keep when they retire.

  • Congress has also voted to give themselves full, guaranteed retirement pensions at age 50 after only 20 years of "service" with a COLA that dwarfs the Social Security COLA.

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