re: I see people on here say that the social security trust fund was “raided”. That’s false

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I promise you that I paid in more than what I got back so far!

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But that is not the fair or functional comparator. The comparison is what an IRA with identical inputs over an identical time frame would look like. If you want to torture yourself, run those numbers.

Link?

Another eminently qualified expert?

GMAFB.

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In less than ten years when the program’s reserves run out and retired people see a 23% benefit cut, many will scratch their heads like idiots and say “why are my benefits being cut?????”

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It’s ridiculous too because we’ve seen this coming for decades. It’s a simple problem of funding for a future liability. Insurance companies do this annually.

Simple solution…eliminate the caps on annual income that’s taxed and phase SS benefits out for individuals that recognize a certain amount of annual income above a threshold. It really is kind of silly to pay SS to individuals that are pulling retirement/pensions/dividends in the high 6 figure range.

Let me say…I don’t LIKE either of these…but we’ve let this sit too long and there are no easy fixes.

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Why not put it all in treasury bonds so it can at least earn some return

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Because the person paying the interest is the lender. Remember, at its core, a bond is nothing more than a certificate of debt.

Consider it this way. You give me $100. I promise to give you $110 back next year. One option for how I could do that is to put your money into stocks/bonds issued by someone else and to use the return to pay your $10 premium. That’s how investing is supposed to work.

Let’s say instead, I was in debt. This debt is from my other, predetermined spending habits and has absolutely nothing to do with you. Because I am in debt, I use your money to pay my debt down. Now, when next year comes around, in order to pay you back, I have to borrow more money from someone else to pay back your loan. You might well be getting an extra return on your money, but I’m still the one paying for it. And because I am still in debt, my “paying for it” requires borrowing that money from someone else. Which is all to say, because I am simply using your money to pay down my debt, it does not generate any additional return. You might perceive that you are receiving an extra return, but your money is not generating any of that return. It’s coming from more borrowing, with interest payments financed out of my pocket.

In that story, you are social security system and I am the government. Now tell me, do you feel confident continuing to loan me another $100 next year? Or does that maybe feel a little unsustainable as an investment model?

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auto downvote

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You sure you want to share that with the class? That makes you sound soft as shite

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By not having a mechanism to keep them separate it was raided.

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Nope. “It” never existed, so it could not have been raided.