I have written before in this blog about the ridiculousness of our Social Security system. Only the naive, ignorant, stupid, or self-interested (politicians and AARP) believe it can continue in its current form and not create an enormous financial calamity. That calamity will be foisted on your grandchildren. Do you really hate your grandchildren that much?
A good portion of the American public does not like to hear the truth.
When Texas Gov. Perry called Social Security a Ponzi scheme, it quickly ended his bid for president. However, nothing could be further from the truth (I am not saying I like Rick Perry, I'm just saying that his statement was dead-on accurate). There are still some people who believe that the money they collect from Social Security, they put in. This is not so and any level of investigation will quickly reveal that the SS benefits that today's retirees receive after a few years (after age 75 in my particular case) comes directly out of the paychecks of their children and grandchildren.
Social Security is not a political issue
This is a matter of simple arithmetic skills learned in the third grade. The nonpartisan Congressional Budget Office ((http://www.cbo.gov/publication/45527)) reports that if current Social Security system remains unchanged, the total amount of federal debt held by the public --- already one of the highest percentages in U.S. history at 74% of the gross domestic product --- would exceed 100% of GDP by 2039, 25 years from now. Maybe we should just change the name now from United States to Greek look-alike. That is exactly where we are going. This is not a prediction. This is a simple matter of addition and subtraction given the course we are on tight now.
Most people think that they get the largest payment automatically. Not true. You need to make choices when you apply and if you make the incorrect choice, you get a smaller check -- for life. Even if you already receive Social Security Benefits, you may be able to change your selections.
Eighteen years ago Fortune magazine published my letter to the editor and my solution at that time was simple. Continue to collect Social Security tax from those in the workforce but those under age 40 would never receive Social Security benefits. In other words, phase out the program. Keep the promise to those who are already retired or within 25 years of retirement and then end the madness. However, no sensible solution matters. Politicians do what is expedient for their term in office knowing that they will be retired or dead when the day of reckoning comes.
No Solution to Social Security Possible
Since nothing will be done about this given our political system of non-accountability, my best advice is to explain this coming calamity to your grandchildren, a calamity which will occur during their lifetimes. They may want to renounce their US citizenship and move abroad (the sooner the better so they stop paying money into Social Security). Alternatively, they may want to move to Puerto Rico which has many benefits of living in the US but those who move from the mainland can avoid Federal income tax (for the next 20 years) which will more than offset the Social Security tax which Puerto Rican residents do pay. ((Forbes http://www.forbes.com/sites/robertwood/2014/07/04/hate-taxes-move-to-tax-free-puerto-rico-stay-american-avoid-irs/)) Or they may want to investigate which countries have the good sense to limit spending to their revenues. Given our political system, that will never be the United States.
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