Social security payments are not your money.

If you are 21 or 71, you need to be an active participant in the Social Security discussion. Why? Let me begin by clarifying the most common misunderstanding about SS. Americans believe it is their money. It is not. 


Court cases in 1937 and 1960, Landmark Supreme court cases, concluded that the SS payments are not yours. SS payments are just like income tax payments. "The proceeds of both the employee and employer taxes are to be paid into the Treasury like internal-revenue generally and are not earmarked in anyway." Get it. SS, referred to as FICA on your pay stub,  is income tax by another name.


Translation-SS payments are not your money. If it was, for example, the money could be passed to your heirs, which it can not. You have no legal right to receive the money you paid in, and your SS benefits are always subject to the whims of the politicians in Washington.


Wake-up recent college graduates, the FICA money that is deducted from your check each month is not your money. For us older college graduates, who are receiving SS benefits now, we lose SS benefits if we work. In other words, if we get paid for work, up to 85% of the social security payment we receive is taxable.  For young people who have just entered the workforce, retirement seems a long way off. It is not. The future arrives with cruel certainty.


The Cato institute has written a position paper on converting the SS system to personal accounts. In this system, your SS payments would be your money in your account and would be earmarked for you, your heirs and your retirement. It makes sense. Google it, or Siri it, but take a look.