Is the “pay-as-you-go” system poorly designed?
It has become fashionable to accuse the “pay-as-you-go” feature of the SS system as a poor design and try to redesign the SS system as an investment vehicle to riches.Those who framed the Social Security Act intended to create a system that would be self supporting from contributions and would provide some financial security to those entering retirement in a delicate financial state. Out of necessity, the SS system evolved to what seems to be a “pay-as-you-go” system. Although designed so that each worker’s contributions would be secured in an imaginary “lock box” until retirement, events doomed that design from the start. Early retirees, who had not contributed much to the fund still had to have an adequate retirement, even if their receipts far exceeded their contributions. Payments to early retirees reduced the funds available in later years. Inflation, which had huge leaps in the 1970’s, required huge increases in FICA taxes to compensate retirees trying to exist on pre-inflation p
