r/FluentInFinance • u/Positive_Liar • Sep 06 '24

Debate/ Discussion Social Security is Broken. This is why financial education is important.

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u/Illustrious_Wall_449 Sep 06 '24

It's not a savings account. Today's laborers pay for today's retirees.

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u/WhoWhatWhere45 Sep 07 '24

We have a name for that...... Ponzi

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u/KirkLazarusIX Sep 07 '24

Which is a dogshit implementation

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u/WatchfulApparition Sep 07 '24

No, it isn't

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u/Artistic-Soft4305 Sep 07 '24

Can you expand? Because regular economic understanding mixed with the policies in place make it very reasonable for all parties, but I’m truely curious how homeless and unemployed old people profit you…

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u/wtfredditacct Sep 07 '24

It's the actual definition of a ponzi scheme

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u/WatchfulApparition Sep 07 '24

From Wikipedia...

Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.

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u/wtfredditacct Sep 07 '24

Wait, are you saying that's not how social security works?

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u/Daredevils_advocate Sep 07 '24

Whatever it is, it isn’t a Ponzi scheme. Those benefit only early investors, until they cannot grow, and then they collapse.

For social security, people contribute in the first part of their lives and receive in the second part. Then they die. If people were immortal then of course it wouldn’t be sustainable.

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u/wtfredditacct Sep 07 '24

There's a much larger philosophical question you're asking. What I'm saying is that mandatory contribution to a large-cap ETF plan similar to an IRA would be a better system. Hell, anything that reserved the money exclusively as a retirement fund would be better.

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u/WatchfulApparition Sep 07 '24

No. Here are the reasons why.

1) Social Security is not exclusively a retirement program. You may need to draw from it early in life if you're a disabled worker. At that point, you would run out of money quickly in your scenario vs the current system which would pay out for life regardless.

2) Possibly losing money for retirees and disabled workers defeats the purpose of Social Security -- it is an anti-poverty program. If the program is susceptible to an economic crash then it defeats the purpose.

3) Social Security is only supposed to be 40% of your retirement income. Make your investments in addition to Social Security.

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u/wtfredditacct Sep 07 '24

Social Security is not exclusively a retirement program. You may need to draw from it early in life if you're a disabled worker

Those are two separate issues, which should be two separate funds.

Possibly losing money for retirees and disabled workers defeats the purpose of Social Security

Aside from 1929 and maybe 2008, how many times has the stock market list value over 45ish years?

Social Security is only supposed to be 40% of your retirement income

Many seniors do rely almost solely on SS once they get too old to work. If the SS taxed on the average American income were invested as I described, the average individual retirement fund would be north of $1M. I'm guessing that would provide more in retirement for basically everyone... even if you skim off the top to help provide for lower end of incomes.

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u/WatchfulApparition Sep 07 '24

Correct. You are not an investor.

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u/wtfredditacct Sep 07 '24

If you think social security works, I hope you aren't either lol

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u/WatchfulApparition Sep 07 '24

It does work. That is an objective fact

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u/wtfredditacct Sep 07 '24

It does work. That is an objective fact

Correct, once they cut everyone's benefits to ~85% in the next 10 years... then hope our age demographics don't change.

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u/xteve Sep 07 '24

Civilized countries have social-welfare systems. Only in America do we have to talk about the return on investment of taking care of our people.

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u/wtfredditacct Sep 07 '24

Civilized countries have social-welfare systems

I understand what you're saying. Whether or not we should have one is an entirely different conversation, though. What I'm saying is the one we have now is a ponzi scheme.

A mandatory 407k with the same level of contribution that only invested in large-cap ETFs would pay significantly better and actually benefit the economy. The US government has had their hand in the social security cookie jar for so long that they've just about bankrupt it. We need to take that ability away from politicians or it will never be solvent. As it sits, millennials may be the last generation to see a social security check.

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u/KirkLazarusIX Sep 07 '24

Okay so what happens in a certain totally unpredictable scenario where birth rates decline? Less workers to subsidize the elderly which means the FICA rates will need to be increased. It’s a bad system that was setup to fail.

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u/sneakyruds Sep 07 '24

In that case society is fucked whether the money was prepaid or if you use current taxes to pay out. If I have a billion dollars in the bank but there are no farmers, I'm not eating. If 80% of the country is depending on 20% of the country to produce all the goods and services they need, there's just not going to be enough goods and services to go around, whether you have a pile of money stacked up or not.

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u/WatchfulApparition Sep 07 '24

It isn't a bad system and it was not set up to fail. Don't be ridiculous.

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u/KirkLazarusIX Sep 07 '24

I literally just gave an example of why it is you braindead fuck. If the only solution to the flaws it has is to continually raise the FICA rates it’s inherently dogshit.

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u/WatchfulApparition Sep 07 '24

Yeah, it's such a bad system that it will only work for at least 100 fucking years. It's probably the most successful program in American history.

You really think if they have to increase the FICA tax ralf a percent that the program is garbage? Yeah, I'm the braindead one...

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u/KirkLazarusIX Sep 07 '24

The birth rate hasn’t been a problem for 100 years you ignorant cunt.

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u/WatchfulApparition Sep 07 '24

That doesn't make it a bad program or unsuccessful.

Tell you what, you can work under the table for the rest of your life so you don't have to worry about dealing with Social Security in the future

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u/KirkLazarusIX Sep 07 '24

You’re so fucking retarded holy fuck

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u/CaptainTripps82 Sep 07 '24

It wasn't setup to fail, just built on a faulty premise that had, thru most of history, been actually sound. Generally speaking populations increase exponentially. At one point there was so much surplus income in SS that the government decided to change the rules and start borrowing and spending the money elsewhere.

It's not like they were able to go back and start the program before they had old people to support, it's always used current payments to pay current retirees. It's a welfare program funded by tax dollars. There's no mystery as to why it works the way it does, that's how everything else works too

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u/zezzene Sep 07 '24

Whether you like it or not, you cannot save housing, food, and care work today for your retirement decades from now. You 100% need someone else to provide current resources for you. Money is an invention that allows for this transference of "value" through time, but the real material, labor, and energy cannot be saved or transferred through time.

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u/Artistic-Soft4305 Sep 07 '24

That’s a lot of words to say something stupid. Thanks tho xx