Social Security Ponzi
Texas Governor Rick Perry says Social Security is a government Ponzi scheme. He may be right. Since the bleeding hear liberals in Congress started raiding the Social Security funds years ago to provide benefits never originally intended and to people who had never paid in a dime, the funds began their decline and questionable availability for future retirees.
Just doing a little basic math supports Perry's argument. A simple example of this miss managed program and the government's "theft" of funding is easy to compute. Let's say a 22-year old individual graduates from college and begins earning $30,000 a year. That's the basic starting pay today for many graduates going into law enforcement or other civil service jobs. Let's also say that during the next 40 years from 22 to 62 years of age he NEVER get's a raise, which we know is totally ridiculous, but it helps make the illustrate the government's theft even more dramatic.
FICA (government) received approximately 15% of that person's earnings. Half from the individual and half from the employer. At the indicated salary that individual's total contribution would be approximately $375 a month. If you take $375 a month and put it into an IRA account, outside the government, that returns only 5% interest, compounded only quarterly, like most bank savings accounts, for 40 year when that individual will reach 62 years of age, your total will be $575,000!
$575,000 at 5% interest will pay you $28,750 a year from that point forward forever, without ever touching the principal! That's $2,395 a month for the rest of your life and your kids will inherit the $575,000 when you die! If you decided to set that amount up as an annuity, that paid the same 5% interest quarterly, where you would end up at 82 years of age with nothing, you could be paying yourself $3,779 a month or $45,348 a year over the next 20 years, and if you die before then, your family will still inherit the remaining balance! Again, be reminded that these calculations are using no increase in the individual's earnings over a forty year span and we all know that's not going to be the case
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors (retiring workers) from funds contributed by new investors (current and new workers). With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out. If it walks like a duck, and quacks like a duck ... hello?
So you tell Granndpa how well the government is managing your mandated retirement PONZI account.