In a thought-provoking new piece from Forbes, Certified Financial Planner Jim Blankenship takes on Social Security — admitting its qualms but urging that it be protected and updated.
“Much has been written about the ills of our Social Security system as it stands today,” says Blankenship. “There has been considerable banter about how the system is a Ponzi scheme (it’s not), how it will go bankrupt soon (it can’t), and how we’ve got to do something about it soon (we do) like abolishing it completely (we can’t).”
Blankenship dismisses the notion that the entitlement program is akin to a “Ponzi scheme” — a comparison that Texas Gov. Rick Perry made in his campaign book Fed Up! — reminding us that the Social Security program isn’t a savings plan but an insurance plan. This means that Americans pay far more into it over their lifetimes than they should ever expect to receive back from it.
“Like it or not, that’s what we’ve put in place, and that fact is not likely to change,” Blankenship writes.
Likewise, Blankenship dismisses chatter about Social Security going bankrupt, saying that with new money constantly coming in there’s no chance that the system can go bankrupt, even though amounts paid to new recipients may need to be adjusted in the future.
“We’ve got to do something to repair the system, but abolishing it isn’t the answer — it’s not even among the viable answers,” says Blankenship.
Can you think of some other common Social Security myths?
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