What if I told you that one of the most impactful pieces of legislation in American history was all a scam? What if I told you that the man regarded as America’s third greatest President of all time was actually one of its worst? Of all my controversial views, my opinion on Social Security and Franklin Roosevelt seem to be the ones that get me yelled at the most at family parties. Republican or Democrat, it doesn’t matter. Everybody loves Social Security. How could they not? Social Security is the system that guarantees the “right” of every American to leave their crap job one day. People pay into the system, and they get their money back when they get older, right? Wrong. None of that’s true. The truth is that the public understanding of Social Security is all based on lies. Once believed to be of benefit to the entire population, Social Security is yet another wealth redistribution system that is holding the majority of Americans back from realizing their full financial potential.
Let’s get background out of the way. In case you didn’t know, The global economy wasn’t very good in the 1930s, which led to the election of a new type of democrat, Franklin Roosevelt. Seeing himself as the answer to the nation’s economic woes, the former governor of New York saw it fit to push a ridiculous amount of spend-heavy economic plans through Congress. One of these plans was Social Security, a policy that, among other things, would provide financial support to elderly people. Under this plan, people that made it to the age of 65 would be able to retire and receive a government sponsored “pension”, which would open jobs up for the young people coming out of school and joining the workforce. I don’t want to beat around the bush here, this was all a lie. The program does provide a government check for the ederly and it does, theoretically, open jobs for young people, but the inner-mechanisms of the program did not at all function in the way they said it did.
Let’s take a look at this idea of a “pension”. The term pension is foreign to a lot of people today, because pensions have gone the way of dinosaurs. The basic understanding of a pension is that, while you’re working, you will contribute a certain percentage of your pay to a fund. At a certain age, you will be allowed to retire and that fund will provide you with regular payments so that you can support yourself. This is not how Social Security works. In order to have a healthy pension, the person receiving the benefits had to have paid into the system before retirement; however, the first wave of Social Security recipients didn’t contribute a dime. Instead, the financial weight of the program was placed on the back of the workers of that time. This all creates a domino effect. The current generation of workers support the current recipients of Social Security, meaning that the next generation of workers will have to support the current. Under this construction, the program always operates off of a theoretical deficit. There’s a trust fund, but that’s currently being depleted and will run out at some point in the 2030s. For context, if you are currently in your 20s, the Social Security Trust Fund will likely run out 20-30 years before you can collect, making Social Security a nationalized ponzi scheme.
Take a look at the actual intended structure of Social Security. The financial stability of the program banked on the understanding that the ederly were going to die. In the 1930s, most people didn’t reach age 65. Life was hard, medicine was bad, and they died. The program’s structure, at its most stable, can be compared to a pyramid. The few people, who reached retirement age would collect their payments from the strong base of young people at the bottom. What happens in a situation where the ederly live longer and Americans have less children? That’s the situation we find ourselves in today. The top part of the pyramid grew and the bottom part shrank, meaning the structure looks more like a pyramid balancing itself on its tip.
Ignoring all of this, the system is simply not beneficial to most American’s. Even without the structural liabilities, the system doesn’t provide the best outcome to its participants. Put simply, Social Security provides no feasible return on investment. There is no opportunity to grow. Your payout is an arbitrary determination made by 535 rich men and women sitting in Washington DC, and has nothing to do with how much you contributed or where it was invested. It’s just a random number generated by politicians, who are trying to keep the system afloat. If the money that you paid in taxes towards the system went to an actual investment like precious metals or an annuity, you would be in a better financial situation than you are right now.
The why of it all isn’t very clear. Do we keep Social Security, because too many people won’t make the right decisions with their money? Even if that’s true, it’s not really a fair justification on why you should bear their burden. Is it because some people live their life paycheck to paycheck and can’t afford to save for retirement? Maybe, but should we be taking money that they can use to pay bills and debt and putting it into a crumbling system? The truth is Social Security provides votes. People believe it is their right to receive it some day. Any politician, who touches the system, is committing career suicide, and we don’t have any leaders willing to take that risk for the betterment of the country.