Privatizing Social Security

There aren't many arguments to the contrary that our social security system is flawed....massively flawed. It's official name is the "Old Age, Survivors, and Disability Insurance" and is funded through payroll taxes. It's makes perfect sense right? Current tax payers pay for non-tax paying retiree's. The system works very well when population growth continues to raise and the average life expectancy stays relatively constast. Unfortunatley neither of these scenarios have held true. There was a little thing called the baby boom after WWII followed by a return to the original birth rate. Plus, it shouldn't be a surprise that people are living longer, much longer. Does this sound familiar? A friend of mine, Amir just made a great point that this isn't much different than a Ponzi scheme! It's a government sanctioned ponzi scheme. We all know how well those usually work out (see Bernie Madoff).

The social security program as we know it is unsustainable and WILL run out of money if nothing is done. Most believe it's around 2040 which seems like the distant, distant future but it's not, especially when you think of the size of the program and how many people rely on it as their sole income after retirement. Plus the governent has proven that it does NOTHING quickly (watch out, I'm going to continue to capitalize entire words to prove my points.) There have been many calls to privatize the program which would let individuals manage the money in the open market. For years i agreed with this idea. Why should anyone EXCEPT me manage MY money. I couldn't figure out why my tax dollars went to support some old person who is playing golf and enjoying life (probably drinking a martini because old people love martinis) while i'm working hard paying taxes. I have never fully trusted the plan. Why should I expect the next generation to pay for my retirement...what if they decide NOT to? Or better yet, what if they financially CAN'T! Then what...

So, the idea of privatization has always been appealing until recently. What if all of the money in the social security program was invested in the stock market. The losses would be staggering. Instead of the program running out of money in 30 years we would be forced to deal with it now.

It's a pretty scary thought.