Why is it we always hear that Social Security is going broke, and we never hear that Welfare is going broke? I think I answered my own question.

Social Security is something that you pay into so it's waiting for you in the future. What is taken off your pay cheque is supposed to be invested on your half by the government and be ready to be paid back to you when you retire (if you get there). It's the safety net that protects your retirement, assuming you worked hard for your life and paid into it.

Any sort of welfare is paid out of the current year's budget as an expense for those who qualify for it.

So to answer your question: You hear it that way because you don't seem to understand how the programs are paid for.

The longer answer is: Combination of demographics (people living longer, baby boomer generation moving through the system), increased cost of living for basic necessities vs wages (inflation) and government mismanagement of the fund create the conditions where the fund may not be solvent after like 2035 at the current rate. Welfare, on the other hand, can never have this problem because it's not supposed to be pre-paid for; it's a yearly expense. That's my fluffty laymen's explanation.

I'm not sure if this was a genuine question....

lol this is middle school civics class stuff

come on meow

and quit yer complaining, you've still got social security. thanks to your generation, our generation likely won't when we get around to retirement age.

thanks baby boomers!

thanks obama

obummers a baby boomer!

Agreed pang

sherlock fluff no

the elephant in the room is the low interest rate environment.

AND ZOMBIE BANKS!

lar!

Also welfare is relatively cheap next to social security....it's like comparing gold bars to lint...

apples and oranges in terms of purpose and funding.

ps. ZOMBIE BANKS!

pps. Paul v Virginia: SCOTUS says that coorporations are NOT people.
GOOGLE IT!

Apparently they changed their minds..

http://www.politifact.com/...ty-what-you-paid-what-yo/

i think they for got how much investment in come you would have earned on your ss if you were allowed to invest it.

Um, actually Pang you have it wrong. Social Security is not like this, it is not a fund that you pay into and the government manages for you. It is much more like a ponzi scheme.

Everyone paying social security now is, by design of the system, paying for the people who are currently retired. It all goes to current retirees. From the beginning of the program there were more people paying in than were drawing out so the government used the extra as a great source of extra cash. And of course they periodically purchased extra votes by increasing the benefits. The excess was 'invested' in as a line entry in the federal books. Not even savings bonds issued. Some years back that flipped, and now more is paid out than taken in. So now Social Security is a drain on the budget instead of a bonus, and we have to borrow (mostly from the Chinese) as that budget line is drawn down. That is what they mean by 'Social Security is going broke'.

The only way that Social Security is different from welfare is that there is a dedicated tax that helps to pay for Social Security, and welfare is taken directly from the general fund. Both are 'entitlements', ie: that benefits paid are not related to income taken in.

All that sidebar done with, Suicidal you have a tremendously good and tremendously funny observation. :)

I got a good laugh at the response to my silly question.....the truth be known, Social Security is funded by the workers. Welfare is funded by money that grows on trees.

guys it's not nice to laugh at OP

it's just the product of a west virginia edumacation

This is incorrect.

Social security disbursements were funded off interest income from prior contributions until 2011 (when the costs officially exceeded interest income).

The fund is still in surplus today (contributions + interest income > disbursements) and is expected to continue to be in surplus and grow until about 2021. After 2021 it is forecasted that disbursements will exceed interest income + contributions and the fund will start to officially shrink. The fund is forecasted to be exhausted in about 2033, at which point what you've said will be true (each year's contributions will be used entirely for paying the disbursement obligations for that year).

Interesting, I didn't actually know these details, good to know!

I guess technically the US will be at the point where all contributions are paying for current disbursements as of 2021 (while being topped up by retained past contributions). 2033 is when the program will go bust (as contributions are expected to only cover about 75% of the disbursements when the fund runs dry).

The shortfall could easily be corrected by raising the maximum income subject to taxation. The additional Medicare tax that kicks in above a certain income level (200,000 for single filers and 250,000 for married filers) comes to mind as a an example. Of course as the maximum benefit is determined by tallying the individuals highest contribution quarters (qualification for social security benefits occurs only after 40 quarters of contributions) there is always the argument that higher earning individuals will pay in more than their eventual net benefit. I could insert my personal opinion about earned an unearned wages here but will refrain.

Bottom line...we need more contributors/creation of more tax paying jobs.

or we need the system to go broke and scrap it all together and people manage their own fluffing security funds like they did before the days of government doing it for them. (as you can see, doing it poorly)

LOL mdevol... yeah, that worked wonderfully circa 1929.

i never understood why there were maximum's on things like that =/

i dont know about the rest of u guys.. but if welfare grew on trees (yes i know its a joke).. i wish i got my 6.1% every 2 weeks they take out of my check for the vast majority of those collecting dont wanna work for it like normal americans do

qz: there is a maximum because that is the highest they are willing to "insure"

For example in Canada the maximum YPE (yearly pensionable earnings) for CPP is about $52k a year. So they only collect CPP from you until you reach the maximum contribution for an individual with $52k of income (or until the max for your income, if your income is below $52k).

Your CPP benefit is based on a formula that uses your YPE as well as other determinants such as # of years you contributed, your age when you start to collect CPP etc.

They could set no maximum on the YPE, but then you would have people with very large incomes having vary large YPEs in their benefit calculation.

Currently the maximum CPP benefit one can receive is about $1,100 a month, which is based on that maximum YPI of $52k. If you set no maximum YPE you could conceivably have people with an YPE of $1 million receiving a monthly CPP benefit of up to $21k.

That is the main reason why they set a max - not only would it be bad PR to be giving a rich person $21k a month in government pension - there is an argument to be made that they don't need it. Thus they try to strike a balance with what is reasonable to sustain a certain standard of living in retirement.

Also if you don't set a maximum, the actuarial tables can get pretty screwy and there is a lot of financial risk involved.