Fixing the Entitlement Ponzi Scheme

The entitlements were a tax - and a lie - from day one

The scare number for the day is 534,000.  The average family will have to pay $534k  to pay of the debt of the Social Security, Medicare and Medicaid entitlements.  Oooh, scary.  It will be beyond scary if the ruling elites in Congress insist on keeping the Entitlement Ponzi scheme supported by Federal Law.  They will bankrupt the Nation.

Bankrupting America

Enter the miracle of compound interest.  Presently, every worker and their employer pay 15.3% of a person’s salary for Social Security and Medicare.  Let’s see what that money can do, over time, if it saved – not spent – by the government.

One statistic is that a couple who retired in 2000 will use $330k in Social Security and $240k in Medicare = $570k

Assume an American only made $6 an hour.   And he never gets a promotion, so he makes $6 for 47 years from age 18 to 65, and he puts the money  in investments – could be government bonds – which average 6% a year (one per cent less than the stock market has made since 1790) , then he will have $313, 239,21.   A couple of lifelong $6 an hour folks will have $626k.   $626k > $570k.

A person who is 55 years old today and makes $6 an hour will have $17,883.70 in 10 years – if he retires at 65.

Meanwhile the average family of 4 in Virginia making a total income of $42.5k a year will have over $1.606 million when they retire.  Plenty enough for healthcare and retirement pay.

When they die whatever remains will be left to their family.  It’s their money.  What a concept.

So, here is the obvious point.  Create Social Security/Medicare 2.0.   Now.  Better, is to create move it to 50 states to let them manage it  – as a Constitutional plenary power of states’ rights.

Cut Federal spending to the bone to pay out the benefits needed for folks grandfathered into Social Security/Medicare 1.0 (original Ponzi scheme).  Cut taxes to create more Federal revenue to pay the bill and to supplement the lower income folks who have less than 40 years to build up their nest egg.

The scary number is only a scary number if Congress stays stuck on stupid.   Let’s fix the people who are supposed to represent us to fix the numbers for the future.