Here are a few thoughts for Social Security retirees – current and future. Recipients will be getting letters telling them of the increased monthly payment for next year. It will be barely enough to buy one dinner at a nice restaurant – although not enough for appetizers and a glass of wine in an upscale eatery.
Social Security is not charity, it is an investment of sorts – a forced investment, however. If it were not forced, it would not exist since it is a very, very, very bad investment. The all-important ROI (Return on Investment) is abysmal. In fact, there is no return as normally calculated. Those who are currently on Social Security have lost money in terms of buying power. What you receive is not worth what you put in. The dollar you contributed way back when had a lot more buying power than the dollar you took out.
One of the main reasons had been the growth of the economy and those occasional run-ups in the costs of everything –inflation has robbed those on Social Security of profits. The monthly payment to retirees is not a livable wage – not even close. Social Security recipients are living in the same grim fate suffered by so many blacks on generational welfare in our segregated communities – trapped in a federal government scam.
Even in the short run, Social Security recipients are losing. The current increase for 2024 is 2.9 percent. The current inflation rate is 4.7 percent. The amount one receives in 2024 has less buying power than the amount received in 2023.
That may not seem like a huge difference, but you need to calculate the current increase against the trend for the past years. Social Security consistently falls behind the real cost-of-living every year. The impact is cumulative.
In 2021 the Social Security increase was 1.3 percent with an inflation rate of 4.7 percent. In 2022 the increase was 5.9 percent against an inflation rate of 8.0 percent.
Uncle Sam calls the increases cost of living adjustments (COLAs). That is just not true. Social Security never increases to meet the cost of living. Retirees lose money every year.
Even worse. The money a retiree gets in January of 2024 is computed on the cost of living in 2023. That is the amount the retiree will receive each month in 2024 even as inflation pushes up costs each future month. In other words, with each passing month the retiree will lose more purchasing power.
Another reason that Social Security is a losing investment is that there is no hope of reclaiming losses. Stocks may go down, but they can go up. A stock market investor may be losing money at one time and earning profits in the future. It is a gamble. Social Security is not a gamble. The recipient is a loser all the time. The longer you are on it, the more you lose.
Social Security as an investment has another problem. You do not own the income you earned. If a Social Security recipient dies the spouse can claim a portion of the monthly payment. However, nothing is available for children. Other investments become part of the estate.
Although the term is used, Social Security is not a Trust Fund. There is no pool of money to back the investment. It gets paid like any other expense of government. The money is appropriated from tax or borrowed income. Social Security does not operate like an annuity. There is nothing to back the money put in beyond the willingness and ability of the federal government to pay out some arbitrary amount each year – and they are never appropriate enough to cover increasing costs. Stocks, bonds, gold and silver are all better investments in the long run.
If President Roosevelt had created a market-based investment plan for Social Security, the average recipient would be receiving up to ten times the monthly return than they are getting today. If you are a retiree, just multiply your monthly Social Security by 10 and see what a GOOD investment would have gotten you – and such a market-based retirement plan would take into consideration downturns in the economy.
In many ways, Social Security is worse than welfare. Those eligible for welfare can cobble together income payment and benefits exceeding the average monthly Social Security check. Many Social Security retirees supplement their Social Security income with welfare benefits. They have to.
At the current rate of retirements and the continuing need to provide so-called COLA increases – bad as they are – Social Security is unsustainable. That means at some time in the future, new retirees will have their Return on Investment reduced even further or the program will not be available to anyone. There are already proposals to reduce the future benefits for those under 50 years old – a later retirement age and decreasing COLAs.
The best you can say about that Social Security check that arrives each month from Uncle Sam is that it is better than nothing – but not a lot better.
