Looking Forward to Social Security

Social Security reform is a subject wrought with apprehension.  But it is very important as a country we take this subject on.

Today the system is “backward paying”, in that payments being collected today are used to pay benefits to current retirees.  Built like an insurance program this system has no real “rate of return”.  Though effective this type of system must be adjusted to deal with demographic changes.  Insulating Social Security from these changes is why moving to a “forward paying” system (monies paid in are invested and paid out to the participants) is a very desirable change.

However, it is a myth that the system as built is inherently broken…  If you look at the program you can see that it has consistently operated with large “surpluses”.  If that money had been set aside (and invested) the program could have been funded for a very long time.  More importantly this “surplus” could have been used to change it into a “forward paying” model.

Instead the “Social Security Surplus” has been spent to support deficit spending by the federal government.  Making the “surplus” just another tax vehicle for federal funding.  Going to a “forward paying” mechanism would also prevent this deficit shell game.  This is probably the best way to insure the future solvency of Social Security.
There are of course many ways to create a forward paying model. So keeping the goal of Social Security, providing a safety net for retirement even in the face of sudden market downfalls, is vital.

Now I wonder if anyone is brave enough to brooch the even more immediate problem of Medicare???

A Madman has spoken…

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