The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  https://boards.fool.com/petersocial-security-isnt-insurance-it-32158809.aspx

Subject:  Re: Attitude Question - SS Date:  3/15/2016  12:58 AM
Author:  Wradical Number:  79326 of 97388

(Peter:)Social Security isn't insurance. It doesn't function like insurance. It's not even close.
It is a welfare benefit for the elderly and disabled funded by a tax on earned income.
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.

=========================================
I would submit that it actually is a pension program. No, there's no account with a balance that belongs to me. But the same is true in any defined benefit plan.

The longer you work, and the more you make, the larger your benefits - same as any defined benefit plan. And if (OK, WHEN) I die, my benefit will go to my wife for her lifetime, because mine is bigger than hers would be on her own. Pretty similar to any other defined benefit plan.

The government is the administrator, and the contributions are held in a trust fund, whose balance may not be sufficient in the long run. Same as a lot of defined benefit plans. The contributions by the employers and employees are mandatory, and legally classified as a tax, so the IRS does the collecting. But hey, that's how the government does things.

And now that I've been retired for 5 months, it sure feels like a pension, too.

Bill
Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us