Your parents’ claim of injustice is ignorant on an even more basic level. Social Security has been funded as a generational Ponzi scheme. Like any Ponzi scheme, the early investors (often only the founder of the scheme) make tremendous returns. Once investors understand that the scheme is without a foundation, it collapses and most investors lose their money.
In Social Security, several generations of early retirees have collected benefits far in excess of any taxes paid. Your parents (and mine) are probably in that group. Payroll taxes were relatively low and then benefits were increased. Only later were payroll taxes greatly increased. In addition with women working much less in the generations of early retirees, the benefits were even higher because non working spouses receive spousal benefits.
The greatest generation has been a roadblock for Social Security reform. It is a something for nothing attitude of the greatest generation that has been a major factor in failure to privatize Social Security. In addition, it is a stubborn attitude to insist that Social Security benefits were earned when it is easy to see the Ponzi structure of the program. Politicians encouraged this thinking process and reform has been impossible.
You are also uninformed about getting a reasonable return for your social security taxes unless you are a low wage earner with a non working spouse. Most baby boomers and beyond will receive negative returns even without considering the looming crisis. The crisis will bring lower benefits, directly or indirectly. I would prefer the direct approach through privatization or raising the retirement age. The indirect approach through a combination of increased payroll taxes and borrowing may have much more severe side effects.
Excellent post.
Regarding Sen. Thompson’s call for boomers to make the sacrifice, as a boomer (b. 1960), I’m up for it. I’m willing to accept significant loss of benefits IF the savings are used to fix the system, especially to move to a system of private accounts.
I don’t want to steal from my kids and grandkids to support an unsupportable system. I’d prefer to eat dog food, first.
sitetest
Raising the retirment age won’t hack it. I have been attending aging conferences and the medical reality is that people start deteriorating in their mental acuity and physical stamina and health after 65. Some will be unable to do the work they used to. This will affect their earning capacity.
I think that social security should consider overall income. There should be a graduated ceiling on those who can receive benefits. Lower income people were not able to save. They needed every cent to survive at a modest standard of living. Higher earners have other income sources. They should not be subsidized in their retirement by the next generation. Their income and standard of living is not the same “social” issue.