| Mouth-Offs | Finacial outlookSocial Security in the United States is not a savings program; it is a spending program. The government takes American's money and transfers it to the elderly and calls this a retirement savings program. By paying out the money immediately, the government doesn’t reap the rewards of interest earned because they are spending rather than saving most of the money contributed.
Not only has the government not saved American's savings, but the number of people retired is growing faster than the number of people contributing to the plan. This means that working tax payers need to contribute more and more to maintain benefits for the retired.
Everyone knows this system is doomed and their are two approaches to fixing it. One approach is to keep the current system in place and just reduce benefits and or increase taxes. The problem with this approach is that it does not solve the core of the problem. Trying to make a spending program equal the benefits of a savings program is not possible.
The other approach is to turn social security into a savings program. Instead of paying taxes directly to retired people, you would pay money into a savings account for yourself which you manage until you retire. The problem with this approach is that to make the transition smoothly, you will have to essentially double your payments. Pay once to the elderly and once to your own savings program.
Politicians said that citizens were too stupid and irresponsible to save for their own retirement, so they created a "forced savings" program which didn't save much at all. Today the US government continues to deny that their retirement program is really a welfare spending program.