It’s about time I did a boring post on an arcane topic that’s only important to the ‘elderly’. How about Social Security (SS)? It doesn’t get much more desiccated than that…apart from the fact that so many of us, and you, will be collecting it sooner than you think. My own refence to this is that I’ve finally hit that season. The reason this is worth going into isn’t just because a lot of retirees are affected, but also because I observed that even highly visible influencers haven’t a clue how it actually works, and that suggests a lot of others are also ignorant. I just happened to run across a video of Ben Shapiro, controversial and ostensibly conservative commentator, as he was debating a bunch of TV gals about SS. Unfortunately, Ben got it quite wrong. In his mind, it’s a tax; you pay in, and then someday it turns into an entitlement that just happens to be far more that the tax you paid. Ergo, in Ben’s mind – and these are my word here – the average SS recipient is no more deserving than the average welfare queen or illegal alien border crosser; therefore, they should have a big chunk of the freebie pie taken from them. The ignorance evident in that view is astounding.
This could be viewed as critique of Ben Shapiro but I suspect there are really a lot of other people that don’t understand the system. There are two ways to approach this, the micro and the macro. I’ll be the guinea pig for the micro. I paid into the system. My employers also paid in directly on my behalf. I happened to be my own employer for an extended time but that’s beside the point here. SS tabulates what was contributed over the years. When you reach the appointed time, you receive X, according to their records and benefit tables. Those who put more in [were ‘taxed’ more] get more back. Relative to today’s dollars and benefit amount, I thought I would be raking in astronomically more than I ever put in because of my low uninflated wages all the years I was young and poor, and a season of weak earnings during later career changes, and yet, the total amount I’ll receive back won’t reach the dollars I and my employer’s contributed until I’m within about 3 years of my average expected lifespan. A shortfall for the system, yes, but a lot less than I expected and a chunk of that is due to the COLAs made necessary by Biden’s hyper-inflation during the past 4 years. Of course, none of this is static and the system will be either stressed or relieved according to a lot of other factors but viewing senior recipients as welfare sponges to be squeezed shouldn’t be one of them. The point of this micro view is that the system was/is intended give back something approximating what was put in….as if that was enough, or fair compared to any hypothetical return on private investing. Sure, some will live a lot longer and collect far more, but how many millions will die early and receive far less?
The macro view is equally important and I covered it before, describing it as a contract that was made and must not be broken. There are a couple macro things I wish for Ben Shapiro to consider. Those who can invest expect a return; in fact the goal of every competent investor is to beat the rate of inflation by a healthy margin. Why should a compulsory program mandated and managed not by the payer but by the federal government be exempt from this standard? Of course we all know the answer, because the system is an open till for the general fund by the discretion of congress and now the executive as well. They long ago dug a hole they can never dig their way out of.
Mr Shapiro, who creates inflation, that beast that jacks up the COLA and the spending power of both withholding payers and SS recipients? I’ll give you a clue, it ain’t Fred and Wilma. Mr Shapiro, how much negative return on everybody’s SS withholdings ‘investment’ would it take for you to no longer consider it an ‘entitlement’? Would eighty cents on the dollar be sufficient or does it need to be more like sixty cents? And by the way, would you stay in an investment fund with that kind of non-return? Mr. Shapiro, at what point would you advocate for the working masses to go their own way and be responsible for their own investment success instead of the compulsory paying into Social Security? Perhaps give the payer a choice to become his/her own defined pension plan or maybe that would never fly because all the smart people would quickly leave the room.
It appears to me that Ben was making an incredibly simplistic and superficial observation of credits and debits of a ledger that he neither understands or expects to someday need himself. If we must remain forced to pay in, maybe drop the entitlement-think? Yes, a lot of people got paid more than they put in, a lot got aid less, the actuarial tables eventually need to be adjusted, but just remember that government wrote the mandate and the benefit schedule, not Fred and Wilma. Fred and Wilma have to invest to make up any shortfall they have after the government has taken their cut from their paycheck. And btw, maybe Social Security would be more solvent for retirees if the government hadn’t turned it into an actual entitlement for welfare minded people with easily feigned disabilities or for illegal aliens.
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