I don't understand why it would only make sense for one class to buy into Social Security. If it's a good investment, it's a good investment; 'rich' means less than 'has a particular set of risk/return preferences'.

And I think you validate his point if you claim that social security is only solvent because it redistributes money from the rich to the poor. If the system is unsustainable without giving some people a lower return to subsidize other investors (i.e. soaking the rich to pay off the electorate), it's a ponzi scheme.

Social Security isn't a good investment for anyone and it never has been. It wasn't meant to be. It was meant to prevent our seniors from plunging into poverty because that would have many negative effects on society as a whole.

If you made it opt out, people would fall into two categories. One would be smart enough to manage their own money and opt out because they can get a better rate of return putting it in a money market. One would be too dumb to manage their own money and opt out because they don't want to pay 12.4% extra income tax. Either way, Social Security would be opted out by almost everyone and totally fail to accomplish the objectives it was created for. At least the way it is, it has a chance, assuming it can remain adequately funded.

I'm actually against Social Security (at least in its current incarnation) but recognize the need for some form of it that is forced.

Why can't we let people live with their decisions? Obviously those who opt out have better things to do with their money @ least from thier pov?

Because pooling risk and providing a baseline standard of living helps everyone, not just the direct beneficiaries of entitlements; for instance, current entrepreneurs aren't paralyzed in steady corporate jobs out of fear that they will need to supplement their parents income to prevent them from eating cat food.

Again: of course it is true that skilled investors can net a better return on their FICA dollars than Social Security can. Social Security isn't an investment program.

I'm still going to have to disagree. You are only looking at one side of the equation, those receiving the benefits and ignoring those who are harmed. How many companies go out of business because they can't compete due to these taxes, how much investment is lost/misdirected since an individual cannot decide where to invest their funds. I could have invested in a store in my neighborhood, but instead the money will be spent by someone in some other area. It's hard to know exactly what we're missing out on because of the massive amount of wealth redirection.

I don't know how many businesses fail because of FICA taxes, but I'm not super sympathetic to the argument, since me and my partners make W2 payroll for a decent sized group of people, and we're doing OK. Relative to much of the industrialized world, the US has an attractive tax rate and an attractive standard of living.

What I do know is that prior to Social Security, young workers being a prisoner to the financial circumstances of their aging extended family was a real problem, and it's not one we think about that much anymore. So I'm pretty happy with that.

Skilled investors? You'd get a better return from the CD at your bank.

Conceded. I think my point still stands, though.

SS is supposed to pay benefits in proportion to how much you put into the system (each dollar YOU specifically put in, you supposed to get out). It wasn't meant as a wealth redistribution scheme and so far it isn't a hardcore redistribution scheme. The "rich" are capped at paying 15% of their income up to ~$100k. Not much money from the rich currently goes to the poor via SS (Medicaid is a different beast)

Now, Obama has floated the idea to remove the $100k cap, WITHOUT paying any additional benefit. With the economy in its current condition, he has backed off that idea, but I won't be surprised if he resurrects the idea if we have a quick recovery.

SS is a scam because on average it pays roughly 1% interest per year, versus an 8% average return in stock market. Furthermore it is scam because the government feels compelled to hide half of the money it takes from you by making your employer pay for half of your FICA taxes.