Some political influencers have made the claim that Social Security is basically a bait-and-switch shell game. Matt Bruenig at the People’s Policy Project makes a good case.
How Social Security calculates retirement benefits:
Note: How benefits are calculated: https://www.ssa.gov/policy/docs/statcomps/supplement/2023/apnd.pdf
Politicians love to say the system is nothing but a bunch of IOUs that add to the debt, but like most things politicians say – they are in the reelection business, after all – it’s actually a half-truth.
The Trust fund is full of I.O.U.s – and it should be. If you managed a trust fund that had to provide safety for other people, what would you invest in? Most trust funds place an emphasis on Treasury bonds. And, the Social Security system is no different. The trust fund buys special-issue Treasuries (special issue because they’re redeemed at par, which removes interest rate risk). Treasuries are a form of government debt – If you own government bonds, whether directly or through a fund, you’re part of the debt, too).
Some politicians want to see partial privatization of Social Security, but that’s discussion for another time. Just read the fine print (a town full of lawyer-politicians acting like economic experts is never comforting.
Whether any solution makes things better for recipients is the subject for further analysis; however, there are a number of ways Social Security can be saved. Basically, it’s a math problem.
Here’s a 13-minute video that will hopefully provide some clarity for you. You may also There are four possible solutions. You might find this helpful. You may also like visiting my Social Security page for more information.
Enjoy! Jim.
