Social Security Basics
Basic information on Social Security is found in this link: How Today's Social Security Works
posted at 10:06 AM PermaLink
Thursday, March 03, 2005
"If it is disagreeable in your sight to serve the LORD, choose for yourselves today whom you will serve... but as for me and my house, we will serve the LORD." (Joshua 24:15) ______________________________
Norm, the author of this blog, is an electrical engineer, and a believer in Jesus Christ. ______________________________
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1 Comments:
Although most of the descriptions of how Social Security works are accurate, the comments that dismiss the accrual of funds as not being more than a bookkeeping entry shows a lack of understanding of financial systems. Taking the most common example, a bank holds money in "accounts" for depositors. Actually those accounts are merely bookkeeping entries. If everyone went to the bank to make withdrawals at the same time-known as a run in the bank- there would not be enough to repay investors (except as the Federal government repays up to $100,000). Like banks the Social Security system depends on the Federal government to stay solvent (although there are no insurers for the U.S. government) and for there be more coming in than going out over time. Unlike the bank, the federal government can tax, print money or get loans in the form of goverment insured bonds. Also, if you buy life insurance, you have little say over how insurance companies invest the money they collect. But unlike the federal government, insurance companies are not in the business of paying out claims if they can avoid them (based on the terms of the contract). The federal government is in the business of protecting citizens as the bottom line of "their" business. Please read and link to more serious and less biased sources, say to Wall Street Journal articles.
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