How does the Social Security system work?
In almost every financial situation that we deal with on a regular basis, there is the idea of an “account”. For example, when you put money into a bank, it is understood to be “your money” and it goes into an account with your name on it. The same thing happens when you contribute to your 401(k) plan at work — you have an account with your money in it, and if you change employers the money in the account is yours. You also have accounts for your credit card, mortgage, car loan, and so on. In any of these accounts, you add money to the account and take money out of it, and whomever holds the account keeps track of how much you have or you owe. The Social Security system is nothing like that. In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. This arrangement came into being because of the way the system started. In 1935, when Roosevelt signed the Social Security Act into law, t
