ANSWERS / Entitlements
Are you worried that the government will not be able to afford to pay your social security (pension) payments?
In the US, the word "entitlements" includes Social Security (government pensions), Medicare (healthcare for the elderly), and Medicaid (healthcare for those unable to afford it). These are all programs to which each US citizen has a natural right as long as they fulfill certain conditions, such as age, income limitations, etc. These programs account for more than 50% of all federal spending.
Social Security is currently estimated to keep roughly 40 percent of all Americans age 65 or older out of poverty [1]. Social Security is paid for on a pay-as-you-go basis in that the tax collected from those currently working pay for the benefits to those not working anymore. Essentially none of the money is invested in the usual sense, but paid out to recipients. There is no such thing as a "Social Security Strongbox" as some think. The reason it is commonly stated that Social Security will go bankrupt at some point in the future is that the amount of payroll taxes collected will become less than that paid out. At that point, if regular payments are to continue to go to intended recipients, then these payments will have to come from both Social Security payroll taxes as well as general tax revenues. This leads to the question above, being "once that happens, will the government still be able to afford it?"
The "Chicago Plan" with "Limited Purpose Banking" presented in this website, once enacted, will at the very least move that date of "bankruptcy" way into the future, if not making the program perpetually viable. As described in the main "ANSWERS" section in this site, this economic plan would decrease federal government outlays by about $570 billion per year [2] -- thus yes, you would continue to receive your Social Security payments but only if the plan presented here is enacted.
References
- 45. Orr, D. (November – December, 2004). "Social Security Isn't Broken: So Why the Rush To 'Fix ' It? In C. Sturr & R. Vasudevan (Eds.), 2007, Current Economic Issues. Boston: Economic Affairs Bureau
- At current very low interest rates, federal interest payments are about $220B and seigniorage as proposed in this plan would add an additional $350B.