Can someone explain to me how social security isn't one big Ponzi Scheme?

[Mark]

I pay social security taxes now which isn't invested but instead it's paid out directly to those who are retirement age. I'm told this is OK because the next generation will pay social security taxes which will go into my pocket. Didn't Bernie Madoff go to jail for this?
Why can't I opt out of social security all together?...I don't pay the tax but I'll never receive benefits. I can get a better return in the market and I don't want the government to try and manage my retirement.

[Profounddress946]

No. It IS one.
If you were to simply OFFER a plan with identical terms EXCEPT -your plan is voluntary- you will go to prison.

[thomas p]

Charles Ponzi and our own Bernie Madoff should envy the Social Security Act.

[Burton]

amen to that

[lari1307]

the reason that you are now paying social security is because congress found that they had money that belonged to social security that was growing and would pay future retired, since congress has never learned to plan for tomorrow and have no brains they raided the ss fund to pay for pet projects and for the never worked a day people. when they talk about the national debt do they include what they owe the ss fund? not that i know of. they owe us plus interest for the money they stole from us.the same has happened with medicare it now pays for medicade. rememberf that medicare is not free. workers pay for it and so do the people recieving medicare. ss takes off the top a min of about 100 dollars from every ss check it issues. not to be confused with ssi which is for non workers or workers not of age to recieve ss.
mandatory programs that the government is SUPPOSED to oversee do not work because the congress has ALWAYS regardless of party in controll has raided. you are right it has become a ponzi scheme and if private enterprise tried it they would be in jail.

[Wounded Duck]

Not if you cannot fathom complex thinking and concepts. I would have a better chance of explaining God to my dog.

[DavidH]

Your first question is rhetorical - it answers itself.

Why can't you opt out? Our former president, GW Bush proposed the very same thing - well, his three proposals would have allowed you to opt out of 1%, 2% or 4%. He warned that Social Security was headed for bankruptcy, and wanted to allow younger people to begin investing small amounts over the long haul to do exactly what you (and I) say you can do - do better in private investments.

Interestingly, the major force in opposition to this proposal, the "Americans United To Protect Social Security" movement (heavily backed by Labor Unions) changed its name to "Americans United for Change" This movement was instrumental in getting Barack Obama elected, and was a driving force behind the Economic Stimulus Package, which benefits whom? The Unions, of course.

You can't opt out because Labor Unions, people with Bush Derangement Syndrome and Obama Derangement syndrome bought into all the big-government rhetoric and killed the idea.

[Paul A]

I admire you for being financially and politically literate enough to realise this fact, so many don't.
I'm presuming you're in the UK. You can do exactly what you propose a little bit - opt out of what used to be SERPS (I think it may be called S2P now) which is a second additional state pension. I used to do that but now I'm so skint I realised my private pension won't be as good as the state one so I opted back in. You can go in and out like the hokey cokey if you want!
You can't opt out of NI altogether though without leaving the country as you'd have to guarantee never to be unemployed either and that if it all went pear-shaped (qv Equitable Life) you'd rather starve to death than accept the basic pension. Are you sure at any point you won't have Alzheimer's and not realise you don't want any help? The state doesn't want to take that risk. In that way it's exactly like an insurance company!
Personally I think you perhaps should have that choice but on the whole the safety net, that we don't allow people to starve, protects more people than deprives them.
Sorry if you're not British and the above makes no sense at all!

[shallowcap239]

Democrats opened the Soc Sec Fund to become a General Fund for Gov to spend as it likes - that is why Soc Sec is now bankrupt - the Rats opened the fund and big gov blew it faster than good blow.

[flower]

It is not a Ponzi scheme like the Madoff scheme because the contributions you and your employer make into the fund does not benefit the government which has an overhead of about 2% in administrative cost. It goes into the SS trust fund for everyone. With Madoff the money went into his pocket. If you had no deductions from your paycheck, and you invested in the market we had 2 years ago, you might have lost it all. Do you want to take that risk? The idea of SS is not to take chances with your money. It is a cushion to fall back on if you don't make enough money in your lifetime to retire on. It also pays you if you become disabled. If you used your SS contributions to invest in the market, that would not be very much money to invest.