Quote:The problem is, many people don't really understand how Social Security actually works.  In general terms, you don't pay into it then get a return out of it when you retire.  It's not a retirement savings plan at all.  When you pay into it, those monies are supposed to fund the outgoing payments.  What ended up happening though, is Social Security started having an "excess" of available funds that our dear government decided that they could put to use elsewhere, so they started "borrowing" money from the Social Security fund.  Combine that with the fact that people are living longer, thus they draw more than what was expected.  As it currently stands, there are really no funds in the "Social Security Account", only a bunch of worthless IOU's from our government.

 

Another problem is many believe that Social Security is supposed to fund their retirement.  This was NEVER the intent.  It was meant to be a supplement to retirement savings/pensions.  However, many people expect to be able to live comfortably on Social Security alone.

 

President Bush's administration had come up with a plan that would have been much better.  What it would have done is set up personal accounts per individual that would be invested in conservative funds.  Take a look at your pay stub, and note how much tax you pay every pay period for Social Security.  Imagine if it went into an interest-bearing account in your name.  Even if the rate of return was low, over time it would grow.  When you reach retirement age, you could start drawing money off of the balance as you see fit.  You would be able to name a beneficiary so should you die, those funds would be transferred to them, so you could leave that little nest egg to your spouse, children or whomever you choose.  With a system like that, you would have more money available at retirement than you get from the current system, and it leaves government out of the equation.

 

This was shut down more-or-less because it wasn't "fair".  People that actually earned more would have more at retirement (imagine that).

 

This is just an "in a nutshell" explanation of the overall thing.