No. of Recommendations: 2
<<Though I must confess, I wonder as more and more workers get displaced how we're going to fund SS because FICA likely won't cover it (you couldn't charge enough FICA to fund it without having a revolt among working Americans). This may be 20 or 30 years off, but it's coming.>>

If it's not a Ponzi scheme, why are your worried?

An insurance plan has assets to cover the promises it makes to pay benefits, and a contractual obligation to pay those benefits.

Social Security has negligible assets to pay benefits, and massive contingent liabilities, far in excess of the assets it owns.

At the same time, people paying into Social security have zero rights to collect benefits if the Congress chooses to reduce benefits or establish another retirement plan, like a 401K type program where people would own the assets purchased by their taxes.

And as you suggest, if employment dwindles away, so will the taxes needed to keep paying promised benefits.

Social Security has repeatedly run short of funding to pay benefits, because Congress keeps raising benefits beyond what people have paid taxes to collect. There is only a nodding association between what people pay in taxes and what they collect, so higher taxes are always needed.

The most you can say for Social Security is that it is a legal Ponzi scheme. But it's still a risky one bound to fail eventually.

Seattle Pioneer
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