Monday, February 21, 2005
I almost forgot that
Let's start with basics. The Social Security system has no trust fund. No lock box. The system is pay-as-you-go. The money goes to support that year's Social Security recipients. What's left over is "loaned" to the federal Treasury. And gets entirely spent. It vanishes. In return, a piece of paper gets deposited in a vault in West Virginia saying that the left hand of the government owes money to the right hand of the government.
These pieces of paper might be useful for rolling cigars. They will not fund your retirement. Your Leisure World greens fees will be coming from the payroll taxes of young people during the years you grow old.
That is why 2042 is fiction. The really important date is 2018. That is when this pay-as-you-go system starts paying out more (in Social Security benefits) than goes in (in payroll taxes). Right now, workers pay more in than old folks take out. But because the population is aging, in 13 years the system begins to go into the red.
As an econ major, I am so very amused over the fact that we are complaining about when a nonexistant fund will run out of money. Ha. I'm glad I have all my money tied up in fine Latin books where the IRS can't find it.
These pieces of paper might be useful for rolling cigars. They will not fund your retirement. Your Leisure World greens fees will be coming from the payroll taxes of young people during the years you grow old.
That is why 2042 is fiction. The really important date is 2018. That is when this pay-as-you-go system starts paying out more (in Social Security benefits) than goes in (in payroll taxes). Right now, workers pay more in than old folks take out. But because the population is aging, in 13 years the system begins to go into the red.
As an econ major, I am so very amused over the fact that we are complaining about when a nonexistant fund will run out of money. Ha. I'm glad I have all my money tied up in fine Latin books where the IRS can't find it.
