Viking Pundit has the score on Social Security
1. Social Security will begin running a deficit by 2018.
2. The average worker can expect a rate-of-return of less than 2% on his or her Social Security taxes.
3. The Social Security payroll tax rate has grown from just 2 percent in 1949 to 12.4 percent today.
4. Social Security faces an unfunded liability of more than $26 trillion.
5. “Saving” Social Security without individual accounts could require a 50% increase in Social Security taxes or a 27% cut in benefits.
In my view, there is only one honest approach to Social Security: fulfill obligations to pay benefits to those who have already paid in and allow the rest of us as quick and expeditious an exit out as possible. Then shut the doors forever.
If this seems radical, I’ll ask one question. If Social Security did not exist, and we attempted to enact today a system like we currently have, would it pass? The answer is unquestionably no. There is no way that any working American would agree to turn over to the government 12.4 percent of his or her paycheck in exchange for a benefit that has no guarantee, on which ownership has been relinquished and that is less than what could be obtained by buying risk-free government bonds. No way. Zero chance.
If you invest the amount that is deducted weekly from you paycheck into TIPS and/or Series I Savings Bonds, you’d actually have a nest egg, which is not the case with Social Security, as Ms Parker knows.
One of the professors in The Principality, however, is against the idea, thinking that people would invest in financial markets, which to him is a bad thing. A worse thing is to see nothing of the money you earn that has been permanently taken away. As a letter to the NYT Editor said, “College students like me have begun to discover that our savings would be better stashed in our mattresses than sliced off our paychecks.” Could the difference of opinion be explained in that tenured professors are vested in full for their pensions for the length of their lives (i.e., unlike private sector pensions, which you can outlive), and college students are not?