Social Security has a “trust fund” with some $3 trillion in “assets.” That doesn’t sound too bad, right? Well, the fund is not sitting on a pile of cash, only on paper claims on the U.S. Treasury (the finance department of the federal government). The 12.4% Social Security taxes collected from you and your employer are spent on today’s Social Security outlays and on other government activities. The “assets” are merely claims on future taxpayers. The system is basically “pay-as-you-go.” The contributions you and your employers have paid into the system your entire working life finance the retirement payouts to your parents’ and grand-parents’ generations.
In the private economy pyramid schemes are illegal, as none of the funds actually are invested in productive activity. Instead, “returns” for previous “investors” come entirely from new marks. Social Security is the equivalent of a pyramid scheme. The main difference is that government forces people to finance it. If you think this is morally Wrong then you have just joined the moral groundswell for retirement freedom.
The fact that you and your employer are paying a combined 12.4% welfare tax to finance other people’s retirement needs and not your own should make you feel morally betrayed. Absent a change you will be a welfare case just like today’s retirees—if there is any money left to dole out when your time to collect comes around. So much for a “Golden Age.” Do you think this is a moral outrage? Congratulations, you just contributed to the moral groundswell as well.
Think Right or Wrong, Not Left or Right 