Social Security is a pyramid scheme

I’m part of the problem, according to Federal Reserve Chairman Alan Greenspan, because I’m one of those Baby-boomers that will soon break the Social Security system if it’s not revamped. The irony is that, in his recent statements to the Senate Banking Committee, Chairman Greenspan admitted I’m also responsible for the prior success of the same system I now threaten.

So let me see if I got that right. Because of a fluke in demographics, namely the Baby-boom population explosion, our current “pay-as-you-go system” for Social Security worked for prior retirees. As long as more people entered the work force than lived in retirement, the system hummed along. However, due to population declines and life-expectancy increases (and let’s not forget that nagging national deficit), that once melodic hum now sounds more like a sour tune. Some have even suggested that it could be a swan song.

My age group and those still younger have been pegged to shoulder a looming Social Security shortfall. Benefits promised (Remember those statements you’ve been receiving from Social Security each year, the ones that reflect your current projected retirement benefits?) will no doubt be substantially reduced.

Chairman Greenspan identified three primary ways to fix the Social Security problem: raise taxes, lower benefits or increase national savings. He noted, however, that consumption must decline relative to income to constitute savings. Given that consumer spending is the primary force supporting our economy, and given that real personal income growth has been nonexistent of late, reduced benefits for future retirees are an almost certainty.

Interestingly, in his testimony on February 17, Greenspan referred to Social Security as the “Social Insurance System.” I supposed he’s right to distance himself from the word “security.” I mean, we all know what to expect from “insurance,” right? Steadily increasing premiums in return for a diminishing level of protection. But I’d suggest another, perhaps even more appropriate name change. How about the Social Pyramid Scheme? Or maybe the Social Multi-Level Marketing Plan?

Those lucky enough to have entered the social security system early have reaped the greatest benefits. The rest of us (especially those over 50), I’m afraid, are about to suffer the law of diminishing returns.

Yes, I understand that the social security system is broken and will require an overhaul. And no, I don’t have a perfect solution to offer. But I’m tired of listening to those who would accuse my generation of creating the pending shortfall. We’ve been here all along. We didn’t just suddenly arrive on the retirement radar screen. And much like the duty we’ve undertaken for several decades, the one that insured our parents and grandparents would receive their intended social security benefits, we have relied upon this system to provide the same for us. That was the sales pitch we received. That is the premise by which we have planned for our futures. Unfortunately, it appears there’s no one to protect us from this type pyramid scheme – and no such thing as truth in government advertising.

###

The Dallas Morning News

Free Funny Videos, Flash Video, Funny Pictures, Clean Jokes

Member

Copyright © 2005 Diana M. Estill - All Rights Reserved 

Last Updated: Tuesday, March 25, 2008 09:01 PM