Imagine, if you will, a man knocking on your door asking offering you a special deal. His proposal is that each week for many, many years, you give him a chunk of your salary. In exchange, when you get old, he will return the money in monthly checks. You will not earn any interest on the money, as it will not be invested, but will be used it to pay off those who signed up before you. If you die, the man will keep the money you paid him.
You would probably slam the door in the man's face for what is obviously a pyramid scheme (or Ponzi scheme) scheme - but this is exactly what today we call Social Security.
Now imagine that you foolishly agreed to this offer (or were forced to join), and several years later the man returned with bad news. It turns out there isn't enough money to pay you back what he promised - he is having trouble getting enough new participants to join the pyramid scheme. Also, he has no money available now, as not only did he spend it giving it to others in the scheme, but he spent it on items for himself.
But he has a new offer for you: if you give him more money each week, he will give you less money back each month in the future, and he will wait a few more years (until you are even older) to begin paying you back. You would probably call the police, as you had been defrauded.
Unfortunately, this new scheme is called "saving Social Security". Like Lando's agreement with Darth Vader, this deal keeps getting worse all the time.
There is ample reason why most 18-to-34-year-olds don't expect Social Security to be there when they retire - the program paid out more than it took in last year, and the so-called "trust fund" is nothing more than promises to pay back money from other tax revenue.
Even if Social Security weren't approaching bankruptcy, it is a raw deal. The effective rate of return on Social Security payments is a little over 1 percent. Indeed, while critics of "privatizing" Social Security point to "risky" investments, stock market returns over 40 years would generate several times more earnings than Social Security, even after market collapses. Social Security may be less risky, but only because it is a guaranteed loser.
It is time to stop talking about saving Social Security, and start talking about ending Social Security.
Some more reading on Social Security:
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