Wednesday, August 20, 2014

You Think Your Social Security Check Comes Just From Your Contributions Every Paycheck?

'Hey, Wait a minute! I thought I paid for everything
in my Social Security plan!'
Think again.

Social Security has been sold for close to 80 years now as a 'retirement plan' for senior citizens. It has been sold as a 'pay as you go' plan where you pay your payroll taxes every week and supposedly, you believe that it goes into an individual private savings account or something where it builds in value for the future.

Nothing could be further from the truth.

SS was originally conceived to be a way to pull millions of seniors out of abject poverty during the Great Depression of the 1930's which made the recent Great Recession look like a kindergarten party at the park. Get money to your grandma and grandpa or great-grandma and great-grandpa so they didn't starve to death during those terrible economic times.

It was originally sold as a 'social insurance' fund but morphed into a 'retirement plan' mode the more politicians made it sound like you had worked all your life and set aside money for your own Social Security plan.

Which you did not. Which you have not. Which you will not under current structure and operation.

Everyone you talk to who is on Social Security will swear up and down on a stack of Bibles: 'I paid all my life into Social Security every paycheck every week. Daggum it! I deserve to get it all back and then some now that I am retired!'

And elected officials in Washington have quivered at the very thought of telling them the truth ever since.

The AARP terrifies each and every one of them. However, the AARP doesn't consider themselves to be a 'political action committee' or a 527 or any sort of active political organization. It operates under a variety of 501(c)3 non-profit entities along with some for-profit divisions which make it a multi-billion dollar annual business, not just a small group of people advocating for the poor seniors.

Which they use to be the single most terrifying lobby group America has ever known. Mention one word about Social Security or Medicare reform and 44 million seniors who vote in EVERY election* will vote against you even if your opponent is Ernest T. Bass.
'I know. I was right dere in it'

According to the above chart above from the Committee for a Responsible Federal Budget, a whole lot of money comes from you, the general taxpayer, lately especially in the last 4 years or so to pay for current SS benefits. $230 billion to be exact from 2010-2014.

'What is that you say, sonny? I can't hear as good as I used to' you can already hear. 'I paid every nickel into SS and I am going to get every one of my nickels out!'

A whole lot of general revenue taxpayer money has been pumped into SS lately along with billions of dollars of taxes from SS benefits of higher-income people. This is all money that does not come from the payroll taxes any senior has paid into SS over the years.

So how can anyone really and truly say that Social Security is totally a 'self-funded' program by recipients?

Take a good look at this article 'General Revenue & The Social Security Trust Funds' and see what you think.

We have long argued that everyone would be far better off if we could truly put our SS payroll taxes into a defined contribution plan similar to what they did in Chile in 1980 and retire with far more assets and monthly income streams than the average $1700/month most people can expect to receive once they start receiving Social Security.

Having facts such as these from CFRB is helpful to start that ball rolling.

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