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Social Security

Issue

Despite the humanitarian intent to aid the elderly, the Social Security program is seriously flawed and will be unable to pay its debts in the near future.

The program was improperly designed from its onset. Originally, it was only meant for people who lived past their average life expectancy, which is immoral to say the least. Additionally, government officials had spent the taxes collected for this program on other government projects over the years (going back to the Roosevelt era), which reflected the fraudulent and dishonest behavior of officials since its inception.

For those who disagree, consider the following. What if a private insurance company offered a similar program as Social Security, would you sign up for it? The policy would require both you and your employer to contribute 6.2% of your salary every year towards your account. If you happen to die before collecting benefits, the insurance company keeps the money for themselves.

If you're lucky enough to live past your life expectancy, collecting benefits would depend on other people signing up and contributing to the plan since the insurance company had spent all of your contributions on other things without your consent. Much as how the federal government has done over the years.

Does that sound like a good retirement plan to you or a fraudulent one?

Solution

Since the Social Security program is suspect in nature, the program should be treated no differently than any other pyramid scheme and terminated by law enforcement officials. By doing so, the current 6.2% tax that workers pay into the program would cease allowing people time to build their own retirement savings.

Since cancelling the program may place retirees at a disadvantage, a possible compromise may be to extend the employer's contribution by another 25 years or so. This will allow retirees to receive benefits at a reduced rate while not forcing younger generations to participate in a fraudulent pyramid scheme. If that proves inadequate, another option may be for employers to pay the entire 12.4% tax which will allow retirees their full benefits.

Regardless of whether the Social Security program should be continued or not, participation in the program should be 100% voluntary. People should not be forced to contribute to a pyramid scheme against their will for such would be immoral and unethical, not to mention a violation of their civil rights.

However, the disadvantage of relying on voluntary participation is that it would end up collapsing the entire system since there isn't a guarantee that the program will continue for future generations (see the above example if private insurance ran Social Security). So, there isn't an elegant solution for resolving this longest-running pyramid scheme in the world.

There are four options to consider (none of which are without their drawbacks):

Option A: (end Social Security in full as law enforcement would do for any Ponzi scheme)
Businesses no longer pay into the system (expect lower unemployment, increased salaries, etc.)
Better for younger citizens to save for retirement (+6.4% in additional savings)
No income for current retirees
High death rate due to lack of personal savings (median net worth for 65+ yr old is $266,000)

Option B: (end individual contributions, businesses continue to pay their portion)
Better for younger citizens to save for retirement
Retirees receive half monthly benefits (from average $1,916 to $958/mo)
Moderate death rate due to lack of personal savings (poverty/low income hit the hardest)

Option C: (continue Social Security "as is" with the caveat that taxes will increase in 2035)
Younger citizens will have less saved for retirement
Retirees receive full benefits
Low death rate for retirees due to lack of personal savings, moderate for younger generations
Forced participation into system (violation of civil rights, may be challenged, no guarantee for future)

Option D: (end individual contributions, businesses pay full Social Security tax)
Best case scenario for younger citizens (maximizes personal savings + full retirement benefits)
Retirees receive full benefits
Low death rate due to lack of personal savings
Higher probability of continuing into the future since only businesses pay into program
Extremely high corporate tax rate to pay the extra $1+ trillion amount (may be impracticable)

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