OK people, listen up. We are all getting screwed under our current "social security" plan. Social security is the biggest pyramid scheme pulled off in history, and we have so many people to blame. Our parents and grand parents for not understanding math. Our elected representatives for taking advantage of it. Our selves for continuing to allow our 'representatives' to screw us over. Lets start from the top clearing up a few misconceptions.
Misconception #1 I have an account in my name that is just for me and my retirement.
BZZZ!!!!, wrong answer. Uncle Sugar is extracting 12 percent of your pay (6 from you and 6 from your employer, unless you are self employed, then its all on you) and putting it in a big pile of cash. From that pile they (well, we, really, remember, they = the US govt= us) take out money to pay people that are retired and people on disability and survivors. "Your money" is actually redistributed as it comes into the treasury. When you retire, you will get money from future taxpayers who also think they are saving for their retirement. I'm not makin it up... Take a look here by scrolling down to 'Social security's Assets'.
Misconception #1a The left over money is in a lock box getting interest or something
BZZZ!!!!, wrong answer. Wouldn't that be nice. Actually, every nickel is spent on other government programs like welfare, roads, military, space, whatever. But of course it wouldn't be right to just take it, so we write ourselves IOUs, (in the form of treasury notes) that will be paid back into the Social Security fund in the future, when the amount being paid in (by the new members of the pyramid) is less than the amount that was promised to the old members of the pyramid. Look at the link above.
Misconception #1a-1 Then it's all ok, cuz the treasury bills will collect interest and stuff and it will all be paid for in the future.
BZZZ!!!!, wrong answer. Pay attention skippy!! Who is the treasury? WE ARE! The Treasury doesn't make money, it collects it from all the citizens (thats you!) Or it borrows it from willing lenders, including you in the form of savings bonds, the Chinese, Japanese, Arabs, anyone that has money to lend, but thats an issue for another day.
Here is an experiment I want you to try. Take a $50 bill from your secret stash, and go spend it on a movie and dinner. Writer yourself an IOU for $55 (gotta get interest, right?) and stick the IOU in your stash. Good, now... wait a month, and put the $55 back in the stash. Where did that money come from? The air? No, it came from your work. You had to pay it back. The same thing is going on in the Treasury. The dollars they have to pay back to SS come from someplace, and that someplace is the taxpayers! (YOU!) Are you getting the picture yet?
All right, it's tomorrow now, I'll finish this rant later. I did a spreadsheet figuring out how much i'll have paid in and how much I'll likely collect. It was enlightening, and frightening. Hey, I'm a poet and don't know it! I also did some calculations about how much I could have if I had a private account with the money being taken at gunpoint each pay period.