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Originally Posted by Aleta
To Tina: know what you mean to a point. But, my husband is self-employed and he has been paying 15.3% for 29 years now. He has had no other company to pay his half and he is a sole proprietor and we pay private insurance. I've looked at his sheet and I can't believe how much he has personally paid compared to mine when I worked and had my half paid by a company. If our government would treat the social security system like a lock box, we wouldn't be in this problem today.
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the only problem with this is that the system wasn't designed to be a lock box where your contributions are put in, grow, and are waiting for you to take them out when you retire. it's always been the amorphous 'compact' you hear about
: working blokes pay $ that is used to pay benefits to retirees all basically around the same time. assuming there are enough folks working to balance out the number of retirees, it's a great self-perpetuating system. in your husband's case, the money he's paying isn't for his social security, it's for the SS someone else is receiving right now. the amount he's paid goes in a ledger and he gets a 'credit' for each dollar amount. the credit is meaningless and worthless in and of itself, and is only useful if the government has money to pay it out at the right time.
problem is, SS was established in 1935 well before the baby-boom. taxes were first collected
and benefits first destributed in 1937. obviously folks receiving benefits in '37 hadn't paid anything in before, so they were getting the money that was being paid in by other folks at the same time. again, as long as workers = retirees, there's no issue.
but, birthrates declined after the baby boom, meaning at some point in the future there would be more retirees than workers and the system wouldn't function as it was intended (my taxes go to the government who turns around and mails them out to grandma). did they make any changes when birthrates went south? no. come up with a new system, or at least changes to the existing system? no.