This article explains some interesting aspects of the current Social Security mess. Like for example the fact that for years SSA has been taking in more than it spends, so it should have saved ahead to pay for new retirees.
But much of what SSA raised it spent on people who paid in for a short period of time (like immigrants who work the minimum number of months then qualified for life), or who never paid in at all (like life-long disability cases). What was left they lent to the Federal government which spent it as part of general funds, and gave the SSA IOUs in return. Now that people who have paid into Social Security for their entire working lives – 47 years for me by the time I start to collect -- are retiring, the SSA needs our money back from the Feds. But Congress and various Administrations have been so irresponsible with spending that there is nothing left. The account I paid into for 47 years is nearly empty. The only way for the Feds to repay the SSA money they spent is to borrow more – to issue new bonds – and thus to seek more loans from China that we must pay for in general taxes.
So we are all paying for Social Security twice – once when we paid the money to the SSA from our paychecks, and once when we pay income taxes to get our own money back. And by the way, we pay income tax on the Social Security we receive.
So we are really paying THREE TIMES for every Social Security dollar we receive: once when we pay it in as FICA tax, once when the Feds charge us income tax to raise the SS money to give it back to us; once again when we pay taxes on our own SS money when we we finally receive it.
And yet although we pay in for decades and are taxed 3 times on every dollar paid out, the SS fund is going broke. How can that be?
The message from the people who spent our SS money instead of saving it is that it is the fault of retirees – we are living longer and we want our money back even though (in their view) we don’t need it. They claim the problem is “greedy geezers.”
I think that is nonsense. What do you think?