The Social Security Act was signed into law in 1935 by the president, FDR. Even at the time of signing FDR acknowledged that the system was inherently flawed and a transfer from a paying group to a non-paying group of recipients. He also realized the political capital to be gained from such a transfer and he was a politician, after all.

At the time not as many people lived to be 65 years old as they do today so the program wouldn’t have too many problems for a while. It was a pyramid scam though, plain and simple. The original intentions were that it would not be a retirement program but rather an assistance.

Now we’ve reached the point where the problems become obvious. Politically it is unsolvable. Every few years it becomes necessary to raise the rates on the payers, which works until the current crop of politicians get out of office. Then we hear the expression “Kicking the can down the road.” Just postpone the inevitable, the insolvency that catches up to every pyramid scheme, when the pay outs are greater than the pay in.

Somewhere along the line politicians also realized that points could be made with sub-groups of citizens by adding more benefits onto Social Security. Medicare, both outpatient and hospital stays, were added but now there would be an added charge, like an insurance plan. Make the monthly premiums mandatory but relatively low. Then another president decided to add prescription drug coverage onto SS and have the users pay a co-pay.

In addition, a decision was taken to allow low income people, regardless of age, into a program called Medicaid. While not exactly like Medicare there are some similarities, I’m sure. Then President Reagan decided that no one would be turned down for medical care, regardless of circumstances and required clinics and hospitals to conspicuously post that information near the door.

I’ll try to explain how these things have affected my wife and me. We are geezers, way past the age of eligibility for SS and Medicare. We both started getting our SS at 62 but not Medicare until 65 (the law). My early years in the army had no SS withholding, plus the pay was rather low. When it came for me to qualify at 62, the SS rep and I sat down and he computed what I would have paid in, based on a ouija board (or something like it). We had quit working at 55, so we had a blank space at the end as well. Using some sort of formula he arrived at the figure I would be eligible to receive. He also did the same for my wife, only her work experience was limited because she had only worked in the US a fairly short time, about 20 years or so. Anyway it was all worked out mysteriously and her check would be about ½ of mine.

I’m speculating but to the best of my memory it was decided that I had paid in about 60K, probably my employer about the same. Must have been about ½ that much for my wife.

So, working off the figures we were using (60K plus my employer’s forced contribution of 60K) I’d be eligible for about the average recipient’s monthly of about $1400 at today’s rate or about 17K a year. I can’t do the math but I’m guessing if that had been invested from Day 1 and compounded at about 8 % my nest egg would have been considerably more than 120K. Now the beauty of the pyramid is that I will get my 120K back in about 7 years. The downside is I see no interest accumulation. Moreover if I had died before I started collecting my cash would be lost to my heirs.

You may have heard the standard disclaimer, “Well, some people wouldn’t have saved any, they need the SS.” You also know the answer to that.

A friend told me, “My mother wouldn’t have made it without SS.” I heard, “My family would not have helped Mom or taken her in or done anything.” He was actually saying he was happy to not help and wait for his inheritance.

I’m guessing most parents’ pride keeps them from asking for help unless they are really desperate, but sometimes it may be necessary or some families are there to help their loved ones if they can.

Medicare is another add on. My wife and I pay about $300 a month for Part B or whatever it is. Anyway it’s pretty cheap insurance, a routine trip to the clinic will be over 1K and we are encouraged to see a Dr at least annually for a check up and prescription renewal. Any additional visits or work and we’ve gone way over our premium costs. An example: a few years ago I had a ‘sticky trigger,’ a finger that gets stuck down and won’t release. The surgery is about 5-10 minutes and the cost was 7K; a year later, another repair on the other hand was 11K. If I had to pay out of pocket I’d have lived with the problem. It was annoying, slightly painful, but livable.

Eye doctors love doing cataract surgery, my wife and I have had that, again something we probably would have skipped if we were paying out of pocket. We are still both fairly healthy, avoid seeing doctors if possible, pretty much like old people did 50 years ago. Many SS recipients have far more health issues than we have had and require lots of expensive treatment.

The trillion dollar deficit is about what the over costs of SS/Medicare are. It’s very difficult to find any dollar figures online, other than pie charts that show how little of Medicare is actually paid by the premiums. In addition there is a humongous bureaucracy to oversee the implementation.

The irony is that a trip to the local casino will find lots and lots of geezers lined up at the slots, a ciggie going or an oxygen bottle strapped on. Old people like the slots ’cause they’re easy to understand and now the new machines don’t require putting coins in, just a card.

Promise more SS stuff and a lot of votes have been bought. I don’t know the answers but some things are going to have to change and it won’t be for the better. My best guess is that there will be some sort of SS adjustment made based on income or net worth. Inflation doesn’t help because of the present law.

Bernie Sanders keeps on making promises that repeal the Laws of Economics, his Republican counterparts do nothing to attack the present problems. That ol’ can is getting ‘mighty battered from all the kickin’.