With the payroll tax about to increase from 4.2% to 6.2%, I figured that now would be a good time to take a look at Social Security. Thinking about and eventually rejecting the concept of Social Security is one of the first things that really led me to the pro-liberty beliefs that I have today. It started with a simple question: Why?
Why does the government think that it is equipped to handle my own retirement better than I can? Why do people think that some unknown bureaucrat hidden in some office building in a place unknown to you has a better handle on your own financial situation than you do? Why is it that if I decide not to save for my older years is it then the responsibility of my neighbors to support my own irresponsibility? Why is it that the government decides the age I will receive retirement benefits?
If given the choice, there is no way I’d want my money put into Social Security. I’m a rational human being and I understand that I need money to support myself (and possibly a family) when I decide that I no longer want to work. I have a ton of tools at my disposal to help me achieve this. I can hire a financial advisor, take advantage of long-term investments, keep a budget to track my own day to day finances, etc. I need the government to help me plan my retirement about as much as I need them to help me plan what I’m going to eat. In fact, I’m planning my retirement around the assumption that I will not get a penny of money that was taken from me via FICA.
The inevitable response to this, much like the responses to challenging almost any government program, is “That’s all well and good that you’d plan your own retirement, but what about the people who don’t?”
Yes, there will be people who won’t plan to save enough money for retirement. But people make poor decisions every minute of each day. Instead of advocating for the government to do something about these smaller choices, most people will acknowledge that there has to be some personal accountability. For example, if it takes accountability to not get into credit card debt, why does it then stop short for retirement?
Every day, we have to make decisions that affect our lives and the lives of others. By having government act as a huge safety net for each and every wrong decision that you make, it reaches a point where you’ll no longer see the negative effects of poor decisions. You’ll receive the instant gratification that comes with the poor decision, but the consequences will be eaten up by a government program, or more specifically, taxes taken from others.
Why were you told as a kid not to feed the neighborhood cat? If you did, the cat would come back the next day, and the next day, and the day after that. If you feed the animals, they lose the ability to feed themselves and become dependent on you as their source of food. Want to see a great example of a handout line? Go to the beach with food. You’ll soon have a pretty big following.
Now talk about entitlement programs and bring up cutting the size of them. You’ll end up skewered. It’s political suicide for a politician to do it. Once the government starts giving people money and goods, it’s nearly impossible to take it away from them. There will be people who will read this article and think “This guy wants to take away people’s Social Security. He doesn’t want people to have money when they retire.” This couldn’t be further from the truth. I’m not trying to take anyone’s Social Security away. I just don’t want to have my money taken from me to pay for a doomed program. If Social Security is the great program it’s made out to be, allow me to opt out of it. It should still be able to survive. If those of us who think we have better ways of saving money end up failing, we’ll probably start paying back into Social Security.
How differently would you plan for retirement if there were no Social Security? Would you treat it the same or would you take steps to make sure that you’re prepared? Unfortunately, there are people out there who are so used to living within the system that as long as the program exists, they feel safe and secure. But what happens if the fund dries up or politicians spend it on other things (and we know that would never happen)?
It all comes down to the question of whether or not you (since a government is supposed to simply be a collection of the will of individuals) have the right to take money out of my paycheck and “hold” it for me until I reach what you determine to be a suitable retirement age? How do you justify forcing a service on me that I explicitly do not want?
I’ve come to the opinion lately that Social Security ought to be an opt-out program. If people want the “security” of state pension, great. If people like you and I choose to go at it on our own, great. I would still expect to get the employer match, mind you. An extra 12.4% in a 401K would do nicely towards my retirement.
Let people decide for themselves what kind of retirement planning they want.
“I would still expect to get the employer match, mind you.”
I’ll be speaking to this in a near future post.
The match is nice, if the employer chooses to give you one.
Social Security is a ponzi scheme. There is no “lock box.” And today’s recipients are collecting benefits that far exceed anything they ever contributed to it. When Social Security originated, the retirement age exceeded average life expectancy. But today, folks are living longer and bankrupting the system. The politicians who use it as a political football are no different than Bernie Madoff. The system is a sinking ship and as someone in his mid-20s, I will NEVER collect a dime of the money the government takes out of my paycheck for Social Security.
Furthermore, this so-called “safety net” discourages people from preparing for their retirement. After all, who wants to forego good things in life today so you can squirrel away money for tomorrow? Throw in the means testing that will inevitably be implemented to keep the system afloat, and it completely disincentivizes saving. High net worth retirees will be excluded from collecting benefits. This punishes savers and rewards squanderers.