Pardon my ignorance, but how is Social Security an entitlement program? I thought it was supposed to be forced retirement savings... how often do people get out more than was taken?
It's an entitlement program because what you're entitled to it independently of what you put in. There's no isolation. You don't suddenly get cut off when "your" contribution has been exhausted. You keep drawing from the pool, indefinitely, and in fact this is the common case because official estimates of what people need for retirement (both cost per year and longevity) consistently lag behind reality. The pool "just happens" to be replenished mostly from still-working folks' contributions, but it's still a pool and not individual accounts.
Before anyone else "well actually"s me, as a retiree myself I'm well aware that there is some relationship between what you put in and what you get out. That doesn't change the system's essential nature. It's more of an anti-abuse and anti-depletion measure, similar to raising the retirement age or adding means tests. There's still a big common pool in the middle, and people can still keep drawing from that pool even if they live well beyond the point where their net contribution is negative.
It's a pyramid scheme. You put in $10 over the course of your career, but you take out $20 during retirement (funded by the next generation(s)). If US had shrinking population like Japan instead of growing population it would quickly collapse on itself because each generation takes more than it gives and relies on population growth to not collapse on itself. Or maybe social security rules would change so you have to be 75 before you get any benefits so that most people die before they qualify.
No, the social security taxes levied today go directly to the recipients today, with the plan that when you retire, the next generation will pay for your social security. So it's an entitlement program in the most literal sense.
Saving money in the bank makes sense for an individual, but not a government or a whole country. Because, they can print as much as they need. So why have a big warehouse full of cash when you can just make it later? The limitation to that is that it will cause inflation if you print too much- but if you warehoused the money and then released it later the same thing would happen.
Anyways, the reasons they print money or remove it from the economy are not because they don't have enough, it's because they're trying to moderate the boom/bust business cycle. (Not doing a very good job of it, though.)
By the way, I just want to say that having someone say "pardon my ignorance" gives me hope. I definitely support people who have an open mind! I'm sometimes afraid to ask a question because I'm worried people will downvote or attack me for not knowing the answer. There are tons of things I'm ignorant about.
