Social Security…the ultimate Ponzi scheme

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We found this interesting article in the JBS monthly magazine.   Social Security, like most retirement systems, appears to be one very large Ponzi scheme.

According to the Social Security Administration, more than 62 million Americans are now receiving benefits from the program as of the end of the first quarter of 2018. That’s an increase of 330,318 in just three months. Doing the math, that means at the current rate of increase, every month 110,000 more people on average are receiving benefits than the previous month, increasing the demand for those benefits by $150
million every month. That’s based on the average check being received, according to the trustees, of $1,360 every month. And this from a program that is using up its assets faster than they are being replenished through payroll taxes. Just how long can this last?

(Comment: The average monthly payment of $1,360 means $16,320 per year.  Take a look at what the poverty level is for a 2 person household. [$16,460]……..Federal-Poverty-Guidelines   I really feel sorry for our citizens that try to exist strictly with social security……..and we continue to raise their property taxes.  What do you think will happen when the unfunded pension liabilities of all the public employees pension plans are brought out into the light?  Raise your hand if you think the unions will want the government, and by extension the citizens in the private sector, to cover the shortfall. )

When Social Security became law, Section 709 was written in anticipation for times such as these. When assets dwindled to less than 20 percent of the program’s total annual payouts, the trustees were to inform Congress: “If the Board of Trustees … determines at any time that the balance ratio [assets versus annual payouts]… for any calendar year may become less that 20 percent, the Board shall promptly submit to each House of the Congress a report setting forth its recommendations for statutory adjustments… to maintain the balance ratio … at not less than 20 percent.”

This is recognition that Social Security was unsustainable from the very beginning, and that “statutory adjustments” would have to be made from time to time to keep the program from going bankrupt.
As Boston University Professor Laurence Kotlikoff noted in2016: “The system is in horrible financial shape. Its fiscal gap —the present value of its projected future benefit commitments net of both its projected future taxes and the value of its trust fund— is $26 trillion…. Social Security is 31 percent underfunded.

[That’s] another way of saying that Social Security’s 12.4 percent FICA payroll tax rate needs to rise, immediately and permanently, by almost one third to permit the system to pay all of its promised
benefits over time.”

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