I hope you understand somewhat my question here. I bet that this ends up confirming my views that when the govt. gets involved and takes money from you for a social program, you end up getting LESS in return and thus, a worse deal (you can't control your money either).

For the average, to above average wage earner, Social Security takes more than the gummint 'allows' a person to put in an IRA. Not sure about the 401k though.

The relevant question is: Why does the gummint have to track every penny that we earn, spend or save?

Remember stories of those 'crazy people' who had stuffed $50,000 - $100,000 in their mattresses? Turns out they weren't that crazy after all; just more gummint propaganda.

I haven't answered your questions, but felt the need to rant. Thanks for giving me the soapbox. Now, back to you....

Put the same money that our government STEALS from each of us into a PRIVATE retirement plan and you would end up with FOUR times as much money as what social security hopes to provide. This is based upon my own particular case, but I'm sure quite typical.
In ten years, no politician will want to stand up in front of retirees who've basically been ROBBED by their own government. This is a problem they've yet to address. It's not going to be a pretty sight.

There are a number of ways to look at this:

1. Rate of return - look at the rate of return of Social Security vs. the rate of return of other govt-guaranteed securities, such as US Treasury Bonds and/or T-Bills.

2. No guarantees of return of the capital. There is no guarantee as to the exact worth of your SS benefits when you retire. They can be changed at any time by Congress. In this way to look at it, paying the money for SS is actually MORE RISKY than investing in real estate or blue chip companies.

3. Equal protection under the law: federal and many state employees are allowed to opt out of SS and instead put their money in other funds. These funds have higher rates of return and are based on stocks and bonds as opposed to being based on the ability of the gov't to tax people.

It's one heck of a crummy deal for sick people who probably won't make it to 65, I can tell you that. If I didn't have to contribute to OTHER PEOPLE'S retirement, I could spend my money to make my life more comfortable, to put something aside for my kids, or even on charities I want to support. Heck, maybe I could afford better medical care NOW and actually have some extra choices to make later. I don't really expect Social Security to be functioning as an adequate retirement income for my children, so all in all, I think it's a total GYP. Privatizing ANY PORTION of individual Social Security contributions would make it possible for my kids to inherit something. As it is, if you work like a dog till you're 65 and die on that birthday, it's a total loss.

Social Security is a good deal for people who rely 100% on the government to provide for them and who will have a long, active old age with the capacity to earn "under the table" income that brings their lifestyle up to how they want to live. Otherwise, it's a guaranteed existence of poverty, just as Medicaid and Medicare is a guaranteed method of getting second-rate, "The bottom line is that you're cheapest if you die" medical care.

The money withheld from an employee's check for social security is neither a retirement contribution nor insurance.

Money withheld is mixed with other money in the federal government's general fund and spent on whatever the congress happens to feel like blowing it on at the moment. Social Security recipients are getting checks paid out of current taxes. They are not "getting back" what they put in. There is no legal claim against the money people have paid in so social security is simply a wealth transfer scam. Today's workers pay today's retirees.

The government claims there is a Social Security Trust Fund but it is simply an accounting trick of IOU's the government owes itself. THERE IS NO MONEY IN THE TRUST FUND. If you have worked for 50 years and have had money withheld, the only reason you can expect anything to paid to you in retirment is the fear of politicians. There is neither a guarantee of return ON your money nor guarantee of return OF your money! There is simply no money set aside with your name on it.

I forget the name of the case, but there was a supreme court ruling that people have no right to the money they pay to social security.

A few years ago I saw a couple of articles that said most folks got back all they contributed rather quickly (less than 3 years if memory serves) ...... and even if projecting a reasonable rate of return was included, they usually got back way more than the gave. That may have changed since they've raised the income levels but I don't think so. Also don't forget that SS also served as a 'psuedo' insurance policy for providing at least a little support for minor children of parents who die young and some disability coverage for workers. The value of that 'psuedo' insurance should be considered in any return calculations.

I don't think you have a winner here.

The problem with SS is that it was never set up on an actuarial basis and also was not designed as an ivestment.

Good luck ....

Once you've received around two years of SS checks, you are actually on welfare. You don't put that much into SS to begin with. The 401 and other issues are another story.

It really depends on how long you live.

The overall average is that people collect basically what they pay in taxes. Of course, the effective rate of return on their money is very close to zero. They'd be much better off keeping the money in a private account and investing it, even in passbook savings or government savings bonds.

However, because of different life expectancies for some groups, and because the money paid in Social Security taxes doesn't go into a private account that can be left to your heirs, some groups fare much worse than others.

The biggest winners in the Social Security game are generally white women. They tend to live much longer. Even though they collect less in average benefits, the extra years that they collect makes the program a bigger payoff for them.

The biggest losers in Social Security are black men. They tend to lose money because their life expectency is much lower, and they don't collect benefits for a long enough time to get back benefits equal to what they paid in taxes.

Consider this cheery fact: When social security was started, 42 workers supported each recipient. Now that number is somewhere around three, and when all of the baby boomers retire, it's expected to be closer to two.

There's a reason pyramid schemes are outlawed.

To those 50 year old plus Society Security supporters;

If every generation has that attitude eventually the ever increasing tax rates on future generations to pay for the selfish demands of people like "you" will be the CAUSE of poverty, not the alleviation of it. Do "you" believe that there is ANY rate of taxation that is simply unacceptable in a "free" society?

Over "your" lifetime "you" still will pay a lower percentage of "your" income to support the program than "you" expect others to pay over their lifetimes.

Why don't "you" think any private business that ran its pension plan like this wouldn't be facing indictments?

I'm a 50+ woman who worked all her life and would rather just get the money I put in and to hell with the government subsidies. I don't have much but would rather be broke than have the government give me back my own money as they see fit. Had I put all the money the government took in a mattress I would be better off and so would my kids and their kids. If I wanted a parent to look after my needs I would go to Cuba or China. Our government is lousy at handling their own (ours) finances and how people trust them with theirs is beyond my imagination.

Research to confirm your views always confirms your views - and you will find that the analysis of whether Social Security is a good or bad investment will always confirm the views of the entity that funded the think tank that did the analysis.

That said, it is a worthy topic for trying to understand. There have been a ton of studies and reports on SS over the past few years. Start your research at Firstgov, but remember to branch out into how other countries, such as Chile, fund retirement.

One other important aspect of this debate that often times is not discussed. Abortion has ROBBED you of over FORTY MILLION fellow contributors to the needs of social security.

***There's a reason pyramid schemes are outlawed***

In this instance, SS does far more damage than just economicaly enslave a generation. As of 20 years ago, the socio-cultural projection indicated a larger generational division accomplished with a demand for euthanasia. They weren't just whistling dixie....

They have "taken" more from me that I will get..I think I am at the edge of the break even crowd..those much older will get more than they put in..I am at the beginning if the "payers"..It will be MUCH worse for my kids!

Social Security is a legal Ponzi scheme. It takes three or four (or more) workers today, to pay into SS what the average SS recipient is paid.

"The biggest losers in Social Security are black men."

How right you are. Until several years ago the average life expectancy of an American black man was 64 years of age!!! I assume it to still be about the same. So the average black man in this country contributes his entire life and collects nothing!!

I cannot understand why the black men in this country do not rise up against Social Security and their beloved Democratic Party.

Our government is lousy at handling their own (ours) finances and how people trust them with theirs is beyond my imagination.

We don't. Non-taxpayers decide what to do with our money.

The Love of Money is the root cause of all evil so says several books. Invest in trust-worthy friends and the Government as best as you can understand the laws require. Never Volunteer. Be always willing to help those in need that are close to you. Pray without seasing and forever be humble, Vigilant and Keen of Common sense. Good luck with your studies. It sounds as though you already have a good handle on the next phase of your life.

Good questions!!!

First of all, ask your teacher if social security is voluntary? Do you have to have to participate? The answer is no. You may elect to opt out of social security. However, your social security number is now used as your tax payer indentification number. In other words, you don't need a social security card because of social security, but you do need it for income tax purposes.

Social security is more like a pyramid scheme. The reason it is , is that when it was put into law, people who had never contributed to it, were allowed to draw from it. That means that we are always at least a generation behind in collections. As with a pyramid scheme, as long as people at the bottom of the pyramid are putting in money there will be enough left when it comes your turn.

Now your question about whether it is worth it? If you die before you begin to collect, then I guess you could say it isn't worth it. It all depends on how long you live, and how much the benefits are going to be. Let's say you and your employer put into social security at 15% of $2000 a month salary for 40 years. The amount that would have been put aside on your behalf would be 153,000. If you put the same amount into a mutual fund, The interest made over that period of time would be a million dollars at 7%. You could live very comfortably on that (if you were careful). If it did not make any more interest at all and you lived 20 more years,you would have 5,000 a month to live on .

Now, if you had started putting in that amount into the social security fund, you would be getting about 1,000 dollars a month. That is, unless the government hadn't spent it on something by then.

One more thing, your spouse and children would have the 1,000,000 dollars no matter when you died, however the government would keep it if it was put into the social security trust fund.

The best thing to do, is set aside the same amount that is taken out for social security, so that you don't have to worry about it.

note to self about somethign to say in class: the govt. should leave itself to worry about our security and create some social order.....and then butt out since it does not do a good job when it does anything else.

The state is incapable of producing real wealth; at its best, it can only redistribute wealth. (Throughout history, the state has typically destroyed wealth, but that's another story.)

When redistributing wealth, for example in collecting FICA taxes and distributing SSI and disability benefit checks, the state naturally incurs transaction costs. For example the state must pay bureacrats to administer the collection of taxes and payment of benefits, impose penalties for non-compliance with regulations, imprison those who fraudulently evade payment of taxes or obtain benefits, etc., etc.

Since the state cannot create wealth, and must incur direct costs in transferring wealth, benefits must be less than direct costs for the average participant in social security.

Of course, this logical conclusion only obtains for the "average" participant over the long term. As in a Ponzi scheme, the original participants in social security typically made out pretty well. Those who enter the "system" later, though, are certain to have significantly negative rates of return.

Consider the following table of the history of social security tax rates.

Employee Portion

Year Earnings Total of OASDI and HI

Cap for OASDI HI OASDI/HI Taxes at OASDI

OASDI Rate,% Rate,% Rate,% Earnings Cap

1937-49 $3,000 1.000 0.00 1.000 $30

1950 3,000 1.500 0.00 1.500 45

1951-53 3,600 1.500 0.00 1.500 54

1954 3,600 2.000 0.00 2.000 72

1954-56 4,200 2.000 0.00 2.000 84

1957-58 4,200 2.250 0.00 2.250 95

1959 4,800 2.500 0.00 2.500 120

1960-61 4,800 3.000 0.00 3.000 144

1962 4,800 3.125 0.00 3.125 150

1963-65 4,800 3.625 0.00 3.625 174

1966 6,600 3.850 0.350 4.200 277

1967 6,600 3.900 0.500 4.400 290

1968 7,800 3.800 0.600 4.400 343

1969-70 7,800 4.200 0.600 4.800 374

1971 7,800 4.600 0.600 5.200 406

1972 9,000 4.600 0.600 5.200 468

1973 10,800 4.850 1.000 5.850 632

1974 13,200 4.950 0.900 5.850 772

1975 14,100 4.950 0.900 5.850 825

1976 15,300 4.950 0.900 5.850 895

1977 16,500 4.950 0.900 5.850 965

1978 17,700 5.050 1.000 6.050 1,071

1979 22,900 5.080 1.050 6.130 1,404

1980 25,900 5.080 1.050 6.130 1,588

1981 29,700 5.350 1.300 6.650 1,975

1982 32,400 5.400 1.300 6.700 2,171

1983 35,700 5.400 1.300 6.700 2,392

1984 37,800 5.700 1.300 7.000 2,646

1985 39,600 5.700 1.350 7.050 2,792

1986 42,000 5.700 1.450 7.150 3,003

1987 43,800 5.700 1.450 7.150 3,132

1988 45,000 6.060 1.450 7.510 3,380

1989 48,000 6.060 1.450 7.510 3,605

1990 51,300 6.200 1.450 7.650 3,924

1991 53,400 6.200 1.450 7.650 4,085

1992 55,500 6.200 1.450 7.650 4,246

1993 57,600 6.200 1.450 7.650 4,406

1994 60,600 6.200 1.450 7.650 4,636

1995 61,200 6.200 1.450 7.650 4,682

1996 62,700 6.200 1.450 7.650 4,797

1997 65,400 6.200 1.450 7.650 5,003

1998 68,400 6.200 1.450 7.650 5,233

1999 72,600 6.200 1.450 7.650 5,554

2000 76,200 6.200 1.450 7.650 5,829

2001 80,400 6.200 1.450 7.650 6,151

2002 84,900 6.200 1.450 7.650 6,495

<"C:\My Documents\MyHTML.htm"> TaxRates -------------------------------------------------------------------------------- Year Earnings Cap for OASDI OASDI Rate, % HI Rate, % Total Tax Rate OASDI and HI Taxes 1937-49 3,000 1.000 - 1.000 30 1950 3,000 1.500 - 1.500 45 1951-53 3,600 1.500 - 1.500 54 1954 3,600 2.000 - 2.000 72 1954-56 4,200 2.000 - 2.000 84 1957-58 4,200 2.250 - 2.250 95 1959 4,800 2.500 - 2.500 120 1960-61 4,800 3.000 - 3.000 144 1962 4,800 3.125 - 3.125 150 1963-65 4,800 3.625 - 3.625 174 1966 6,600 3.850 0.350 4.200 277 1967 6,600 3.900 0.500 4.400 290 1968 7,800 3.800 0.600 4.400 343 1969-70 7,800 4.200 0.600 4.800 374 1971 7,800 4.600 0.600 5.200 406 1972 9,000 4.600 0.600 5.200 468 1973 10,800 4.850 1.000 5.850 632 1974 13,200 4.950 0.900 5.850 772 1975 14,100 4.950 0.900 5.850 825 1976 15,300 4.950 0.900 5.850 895 1977 16,500 4.950 0.900 5.850 965 1978 17,700 5.050 1.000 6.050 1,071 1979 22,900 5.080 1.050 6.130 1,404 1980 25,900 5.080 1.050 6.130 1,588 1981 29,700 5.350 1.300 6.650 1,975 1982 32,400 5.400 1.300 6.700 2,171 1983 35,700 5.400 1.300 6.700 2,392 1984 37,800 5.700 1.300 7.000 2,646 1985 39,600 5.700 1.350 7.050 2,792 1986 42,000 5.700 1.450 7.150 3,003 1987 43,800 5.700 1.450 7.150 3,132 1988 45,000 6.060 1.450 7.510 3,380 1989 48,000 6.060 1.450 7.510 3,605 1990 51,300 6.200 1.450 7.650 3,924 1991 53,400 6.200 1.450 7.650 4,085 1992 55,500 6.200 1.450 7.650 4,246 1993 57,600 6.200 1.450 7.650 4,406 1994 60,600 6.200 1.450 7.650 4,636 1995 61,200 6.200 1.450 7.650 4,682 1996 62,700 6.200 1.450 7.650 4,797 1997 65,400 6.200 1.450 7.650 5,003 1998 68,400 6.200 1.450 7.650 5,233 1999 72,600 6.200 1.450 7.650 5,554 2000 76,200 6.200 1.450 7.650 5,829 2001 80,400 6.200 1.450 7.650 6,151 2002 84,900 6.200 1.450 7.650 6,495 -------------------------------------------------------------------------------- Last Updated on 11/03/2001

Social Security Funds should be put in a government lock box under the direction of Al Gore. To do anything else is simply foolish.

A few years ago I saw a couple of articles that said most folks got back all they contributed rather quickly (less than 3 years if memory serves) ...... and even if projecting a reasonable rate of return was included, they usually got back way more than the gave.

For those collecting right now, you're correct. In fact, my grandmother never contributed a cent, yet she pulls a check just like anyone else. In 40 years, when I'm eligible, it will be interesting to see what my ROR turns out to be. I'm betting I'll get back less absolute dollars than I paid in, not even taking into account adjustments for inflation or opportunity cost of interest.

The state is incapable of producing real wealth; at its best, it can only redistribute wealth. (Throughout history, the state has typically destroyed wealth, but that's another story.)

When redistributing wealth, for example in collecting FICA taxes and distributing SSI and disability benefit checks, the state naturally incurs transaction costs. For example the state must pay bureacrats to administer the collection of taxes and payment of benefits, impose penalties for non-compliance with regulations, imprison those who fraudulently evade payment of taxes or obtain benefits, etc., etc.

Since the state cannot create wealth, and must incur direct costs in transferring wealth, benefits must be less than direct costs for the average participant in social security.

Of course, this logical conclusion only obtains for the "average" participant over the long term. As in a Ponzi scheme, the original participants in social security typically made out pretty well. Those who enter the "system" later, though, are certain to have significantly negative rates of return.

Consider the following table of the history of social security tax rates.

History of Social Security

TaxRates

---

Year	Earnings Cap for OASDI	OASDI Rate, %	HI Rate, %	Total Tax Rate	OASDI and HI Taxes
1937-49	3,000	1.000	-	1.000	30
1950	3,000	1.500	-	1.500	45
1951-53	3,600	1.500	-	1.500	54
1954	3,600	2.000	-	2.000	72
1954-56	4,200	2.000	-	2.000	84
1957-58	4,200	2.250	-	2.250	95
1959	4,800	2.500	-	2.500	120
1960-61	4,800	3.000	-	3.000	144
1962	4,800	3.125	-	3.125	150
1963-65	4,800	3.625	-	3.625	174
1966	6,600	3.850	0.350	4.200	277
1967	6,600	3.900	0.500	4.400	290
1968	7,800	3.800	0.600	4.400	343
1969-70	7,800	4.200	0.600	4.800	374
1971	7,800	4.600	0.600	5.200	406
1972	9,000	4.600	0.600	5.200	468
1973	10,800	4.850	1.000	5.850	632
1974	13,200	4.950	0.900	5.850	772
1975	14,100	4.950	0.900	5.850	825
1976	15,300	4.950	0.900	5.850	895
1977	16,500	4.950	0.900	5.850	965
1978	17,700	5.050	1.000	6.050	1,071
1979	22,900	5.080	1.050	6.130	1,404
1980	25,900	5.080	1.050	6.130	1,588
1981	29,700	5.350	1.300	6.650	1,975
1982	32,400	5.400	1.300	6.700	2,171
1983	35,700	5.400	1.300	6.700	2,392
1984	37,800	5.700	1.300	7.000	2,646
1985	39,600	5.700	1.350	7.050	2,792
1986	42,000	5.700	1.450	7.150	3,003
1987	43,800	5.700	1.450	7.150	3,132
1988	45,000	6.060	1.450	7.510	3,380
1989	48,000	6.060	1.450	7.510	3,605
1990	51,300	6.200	1.450	7.650	3,924
1991	53,400	6.200	1.450	7.650	4,085
1992	55,500	6.200	1.450	7.650	4,246
1993	57,600	6.200	1.450	7.650	4,406
1994	60,600	6.200	1.450	7.650	4,636
1995	61,200	6.200	1.450	7.650	4,682
1996	62,700	6.200	1.450	7.650	4,797
1997	65,400	6.200	1.450	7.650	5,003
1998	68,400	6.200	1.450	7.650	5,233
1999	72,600	6.200	1.450	7.650	5,554
2000	76,200	6.200	1.450	7.650	5,829
2001	80,400	6.200	1.450	7.650	6,151
2002	84,900	6.200	1.450	7.650	6,495

---

Last Updated on 11/03/2001

Clearly, the system has a long, consistent history of tax increases: from just $30/year in 1937 to almost $6,500/year in 2002. (Remember, this is just the employee's share; the employer must match that amount. The real annual cost is thus almost $13,000/year for an employee earning $84,900/year.

The total tax rate is a bit misleading. Your employer contributes another 6.2%, which could instead come to you in the form of pay raises, bonuses, pension dollars, dividends on held stock, 401(k) matching dollars, and so on.

Thanks for this and the other posters on this thread. I have hopes of interviewing the President and submitted a request to talk about youth issues, as well as other things(I think pretty much that is now shot due to Bush having to focus on terrorism now with less time for interviews)....and if by some miracle, I actually get an interview, I will ask him about this stuff. It is very intriguing.....

OASDI = Old Age, Survivors and Disability Insurance
HI = Hospitalization Insurance

The tax calculation in the foregoing table reflects the employee portion only for earnings at the earnings cap for OASDI. In 1990 (or thereabouts) the earnings cap for HI was revised to be substantially higher than the OASDI. (One is exceptionally fortunately to "cap out" on HI; it used to be upwards to a salary of a quarter million per year.)

The best web sites for social security info is www.cato.org and www.ssa.gov. (The table reflects data from www.ssa.gov.) The Cato site gives the best insight on how to improve the miserable situation that young people face.

Thanks for the help anyway. Shoot...I thought I may have hit upon something this morning. Sounds like I may have not, though one poster did say at least based on experience that private funds give more.

Thanks.....the black man angle is a good point to raise to question the validity of the Democrats and their "let's help the black people" arguments.

A more interesting discussion would be one on the subject "Ponzi Scheme".
Why is it against the law for anyone to run it anywhere, yet it's OK for the governement to do it?

And yes, I have no doubt whatsoever that the government takes a lot more in than it gives out.
Including what it gives out to people who never contributed a cent to the system.

Thanks for the help anyway. Shoot...I thought I may have hit upon something this morning. Sounds like I may have not, though one poster did say at least based on experience that private funds give more.

There's more to the story than Little John's post tells. While the first group of people to receive SS checks will make out, each subsequent group will get a lesser rate of return, and eventually people will get less than they gave. If you include the opportunity cost of lost interest, it will happen even sooner than you'd think.

Interesting take. Not sure how much that 40 million would help, but it is sad for the human value in any case.

I am quite certain that if everyone had been allowed to invest their FICA tax into US Government bonds instead, in almost all cases they would have been better off. Note that US Govt bonds are inherently no more risky than the Social Security program itself, and are supposedly what our Social Security funds would have been invested in if they had gone into a "lock box" instead of the Ponzi scheme. There is only one reason why the rate of return for the program as actually run would be less than the return of contributions directly invested in US Govt. bonds -- the massive bureaucratic overhead effectively constitutes a management charge that the SEC would consider illegal for a private sector mutual fund.

Note that this constitutes THE retort for those who complain that privatization plans are "too risky." Just ask them if they think that US Gov't bonds are "too risky." Of course they will have to admit that US Gov't bonds are perfectly safe. Then ask them: why won't they let us at least keep part of our contributions and invest them in US Gov't bonds? They will be forced to admit that they have no good reason, unless you count politicians and bureaucrats keeping their hands on your money as a "good reason." It is certainly the REAL reason.

my govt. teacher is actually conservative in some ways. He loves Burke. He has said he is glad that the House decided to go the reasonable route by only having federal oversight of security and not federalize it completely because that usually leads to problems. He is liberal in some ways also, but I remember there are a few things I agree with liberals on myself. I can't think of any right now because it is hard...I am socially conservative, not just politically so I can't think of anything that just pops out...lol. I any case, I bet this will be an interesting discussion. I may decide to wait awhile till we get to social security in class just so it would be more relevant, but I definitely will talk about this sometime.

Check out the following site:
http://www.cato.org/pubs/ssps/ssp18.pdf
HREF="http://www.cato.org/pubs/ssps/ssp18.pdf"

The title is:
"Social Security Is Still a Hopelessly Bad Deal for Today’s Workers"
by Peter J. Ferrara
November 29, 1999

I ran across an interesting little tidbit while perusing the FY 2002 Budget for our government. Click here to go to the budget text. Once there, go to page 117 of the text (121 of the pdf). There you will find a chart showing Social Security Rates of Return for each generation. There are asterisks in the 1975 and 2000 generations. Look at the bottom of the chart to see what the note is. Pay careful attention to the last sentence of the note. Quite interesting when the gov't just comes right out and admits that they are lying (or "overstating" as they put it) about our rate of return; usually they try to beat around the bush. I emailed ol' Dubya about this, but thus far I have not heard from anybody regarding my email. This makes quite an interesting topic in an argument about our wonderful retirement plan.