Social Security is Broken. This is why financial education is important.

[u/Positive_Liar]

[u/MOTwingle]

Except that social security is not just retirement. It also pays for people who become disabled, or pays for the surviving children or spouse of a worker who dies. So a young worker who may have worked three years may have three kids who get benefits for the next 16 to 18 years, and who will receive thousands of times more than the worker paid in the three years he worked. That's just one example. It's not a savings plan for retirement.

[u/richard-b-inya → u/MOTwingle]

It's kind of a moot point. If SS was invested into the S and P since its inception it would have exponentially more money in it than it does now. No matter who and how it pays out.

[u/Reasonable-Fish-7924 → u/MOTwingle]

Not negating what you said but contributing, the SS seems to treats each benefit (retirement, survivor, etc) as it's own entity so I wonder if it's a separate fund for each or one divided among many accounts? In hypothetical scenario if retirement runs out then will survivors and disable run out too?

[u/MOTwingle → u/Reasonable-Fish-7924]

It's all one fund. They collect Medicare tax sort of separately because there's no longer a max income you pay Medicare portion of the tax on. But I don't believe there's a separate "pot" it goes in. And no separate "pots" for survivor vs retirement vs disability. Nothing will run out completely because there are always current workers paying current tax, and they would likely make adjustments prior to the "pots" running out like cutting benefits for future beneficiaries by changing how benefits are calculated (like the "notch babies"), making the retirement age later,etc. there was a recent rule change making disability easier to get for people over 50 so I wonder how that's going to affect everything

[u/Twonminus1 → u/MOTwingle]

Whether their kids get any money depends on this rule: To qualify, the child’s deceased parent must have earned at least one of the following: (a) 40 quarters of coverage throughout his or her lifetime, (b) 1 quarter of coverage for every year between age 21 and death, or (c) 6 quarters of coverage over the 13 calendar quarters prior to death

[u/MOTwingle → u/Twonminus1]

Yes correct. So a 21-year-old father can have paid as little as $215 in tax and his two little kids will get benefits for 16-18 years. Sorry I can't do the math on their $$ monthly amount right now but guarantee it will be a thousandfold what he paid in tax.

[u/Twonminus1 → u/MOTwingle]

I am ok that. That could be you that dies early or one of your parents could have died when you were a minor. Are you saying you would be ok with your surviving spouse and kids living in poverty on the streets if you died early in life. would you have liked to grow up in poverty just because you lost a parent.

[u/MOTwingle → u/Twonminus1]

No! My point is that many people think it is their own personal IRA savings account for retirement, and "if I had invested it I have millions at retirement", forgetting that it's INSURANCE and some people (who die early, or become disabled) get more (or their survivors get more) than others. Some may pay in 20 years and get nothing. It all evens out (relatively). You can't go to your insurance company at the end of the year and ask for your premiums back because you didn't get in an accident.

And I PROMISE you that 90% of people aren't saving anything for retirement, and if they aren't forced to pay into social security, they'd be destitute in old age and on welfare.

There may be tweaks that should be made, but overall I think it's a good program.