Photo courtesy of forwardstl
The history of social security isn't interesting by any measure. In fact, some may rather have a carrot shoved in their eye instead. But don't grab your carrots just yet because you'll soon find out why this system will fail.
To give a brief background, the Social Security Act was drafted during Roosevelt's first term in 1935. He became the first president to advocate federal assistance for the elderly.
This "social insurance" was a means to protect the elderly after experiencing the roughest economic time in American history, the Great Depression.
Seems like a great idea to achieve financial freedom...but here's where the history of Social Security reveals its flaws.
When the Social Security act was signed, there were approximately 60 workers to every one recipient of Social Security retirement benefits. Meaning, you had 60 people paying into the system for one receiving Social Security checks.
Shorty after the benefits were expanded, you had 15 workers to every benefits recipient. In the 1980s, that ratio dropped to 6 workers to 1 recipient.
In 2006 when the babyboomers started to retire, you had 2 workers paying into the system for one receiving Social Security checks. Since its inception, we went from 60 down to 2 workers carrying the load for one recipient.
See the problem?
Ida May Fuller received the first monthly payment of her Social Security benefits on January 31, 1940.
In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54
After her second check, Fuller already had received more than she contributed over the previous three years.
Bless her soul. She lived to be 100...and collected a total of $22,888.92. That's over 9248 times the amount that she had contributed to the plan. Seems like she'd be the millionaire next door..With that rate of return...who wouldn't want to sign up for that?!?!
This is the problem that America faces. The Social Security system is failing, too many retirees depend on it as one of their way to save money, and the government wants the program to continue.
Unfortunately, the history of Social Security will soon end, like all socialist programs. Is there an answer? I don't have one. What's scarier is what may happen right before it falls.
(Continue reading about the end of Social Security retirement benefits.)
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