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URL:  https://boards.fool.com/t-is-extremely-unfortunate-that-some-people-pay-32158568.aspx

Subject:  Re: Attitude Question - SS Date:  3/14/2016  9:06 PM
Author:  Goofyhoofy Number:  79320 of 98519

t is extremely unfortunate that some people pay into SS all their lives and their spouse or their kids lose out on all that lost wealth because of the early death of the contributor.

And I think it's unfortunate that I pay lots of money for fire insurance on my house and will probably never get to collect. That's how it works. If everybody got to collect everything they ever put in to Social Security, including inheritors, then benefits would have to be lower, or the amounts put in would have to be higher.

As it is, I am unable to reconcile the complaints that "people don't get back what they put in", and yet apparently the system is disgorging so much money that "it is going broke." Either people (in aggregate) are getting more out than they put in, or the system isn't going broke. Which is it?

It is vital to remember that what you pay to social security is a TAX. It's not insurance. It's not a pension program. It's a tax. There is no account with money in it set aside for your personal benefits. The money is gone and no longer yours. It belongs to the government.

Your attitude seems to reek of politics, rather than evaluation of how the program functions. The money doesn't belong "to the government", it is being paid out to others who are elderly and (usually) no longer employable.

On the other side, unlike insurance, you have no legal guarantee of any benefits. Congress is free to change the benefits under the social security program at any time in any direction for any reason. If an insurance company tried to do that, you would likely be successful in your suit for breach of contract.

And yet insurance companies go broke all the time, and could potentially take every time you have ever sent them and give you nothing. About 10 such events happen every year. (Around 400 such companies have gone bankrupt in the past four decades.) Luckily, it is the [state] governments which backstop your "investments" in these things, even though there is no equivalent to the FDIC which mandates they do so.

If you work for 10 years, then never contribute another penny, you still are entitled to some social security benefit. By contrast, if you buy a term life product and then stop paying on it, you get nothing. Worse, if your company goes out of business and you decide at age 50 (pick a number) to restart, you will likely have to pay more, perhaps a lot more, and depending on your health you may not be able to get insurance at all.

PS: Congress can and does change laws all the time. They could - and have - for instance, change the taxation structure on investment products such as insurance payouts. That's what Congress is for, to keep updating laws and programs for the benefit of a stable society.

It is vital to remember that what you pay to social security is a TAX. It's not insurance.

It's as though the word "TAX" gives you convulsions. The Social Security system has worked pretty well for 80 years, far longer than most insurance companies have been in business, and unlike more than 1,000 of them which are no longer in business - it is still paying benefits to millions of seniors across the country. Perhaps a bit less spittle and a tad more reason would be in order?
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