I want out of Social Security

Social Security has long been a subject of contention among the Political Parties. The Democrats and Republicans both claim they want to "save" it, all the while they've been plundering it for decades. I will simply make the case that they are all liars, and given the historical data, I want out. It is broke, it is a joke, and I will be much better off to save for and provide my own retirement nestegg.

Let's start with a zinger, shall we?

Bernie Madoff is in jail, and Social Security is legal?

According to CNN Money from August 2010, Uncle Sam has borrowed 2.5 TRILLION from the SS Trust Fund since 1983, but has promised to pay it back. (By my humble count, that's a total of 3 Republican and 2 Democrat Administrations with the Democrats controlling both houses of Congress roughly 60% of that time) The article also notes that "When the $2.5 trillion is fully paid back by 2037, Social Security will only be taking in enough payroll tax revenue to pay out 76% of promised benefits."

In 2009, Allen Smith, economics professor emeritus at Eastern Illinois University wrote, "Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public." - CNNMoney 8/9/2010

From Wikipedia:

Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.

Someone please explain to me how Social Security is NOT a ponzi scheme. Pretty Please? Again from the above CNN Money article "Some 53 million Americans received Social Security benefits last year, while 156 million workers paid taxes that support it."

I can save money at a better rate of return on my own.

So, I am taxed at 7.65%. My employer matches that 7.65%. The money goes in to a fund that, for all intents and purposes, does not exist, and I am supposed to be confident to expect a return? Let's have a talk about that return.

No one can explain this better than Dave Ramsey. I am a perfect example of what he lines out here. I am 34 years old, a married father of 2, my wife does not work outside the home, our annual household income is less than $50,000 per year, we have no current retirement savings. I ran this example in a spreadsheet and here is what I came out with -

If I were able to invest the same 7.65% withheld by Social Security into my own retirement fund (Roth IRA, 401K, etc.) beginning next year at age 35, at age 62 I would have $743,428.17 in my account. That would yield a retirement income (8% draw from the account) of $59,474.25. Just as in Dave's example, this assumes that for the next 27 years I would NOT receive a raise...ever. If left alone to age 65, my account would have over 1 million dollars in it. Instead, I MIGHT get a check from SSI large enough to buy groceries. Again, why would I choose to stay in this system? Oh that's right, I am forced by the government to stay in it. I'm too stupid or irresponsible to save my own money, so I need my great provider in Washington to save money for me...but they don't have money saved for me...they have a giant hole where the money is supposed to be but isn't. They stole the money. It's gone. It doesn't exist. Why is Madoff in jail again? Just checking.

Wall Street is out to get me

All this assumes that the money would be placed in the stock market rather than government funds. All of the drama and crying over the last 18 months says that the market isn't safe and you're better off putting your money in a jar in the back yard. I disagree, and fortunately so do a lot of other folks.

"It has been noted however that recent stock market drops were overall nowhere near the severity experienced during the last stock market crash in 1987. Other evidence suggests that the media is manipulating and over-inflating stock market drops and calling them "crashes" in order to create the perception of a great depression." - from World-Crisis.net

24 hour news cycles have led to some of the greatest misinformation in the history of the world. When seeking the truth, which is what I will base the choices I make for the security of my family, I steer far away from the major news networks. Their bidness' is fear, and bidness' is good.

All I seek in a supposed "free economy" is the freedom to make my own choices. "Life, Liberty, and the pursuit of happiness" as Jefferson so aptly wrote is what I'm after.

Social Security may have been created with good intentions, but it's time to face the fact that good intentions do not make good choices. I want out. Uncle Sam can keep all I contributed thus far. Just let me out. The ship is sinking. I will forfeit all rights to benefits. Just....let....me...OUT! You want to stay in? That is your choice. Just please, let me out.
Posted on September 29, 2010 .