Posted on August 03, 2010 by jia zhou

Social security tax is inevitable for everyone who is eligible to work, and have to be deducted from their paycheck as part of the tax. We paying this tax for 2 reasons. 1 is for the situation when you temporarily out of work, and the unemployment insurance would cover for your daily expenses for a little while. 2. when you are retired, you will have something to in return as part of your early investment. And you will get your investment back month by month until the day you die. That is the purpose of social security in my understanding. But the question is, will social security continue forever, and this plan will work?

According to many economist calculation, social security will not continue forever, and sooner, it will not cover up the entire population of United States in the near future. So, 401k will be the alternative choice. Unless I knew that for me, it won’t help me at all, but I am still investing my tax money into it to help the people who are reached their retiring age now. So, it is pretty much similar to those people so – called Ponzi Scheme. A Ponzi scheme will only pay for those people who get in first, because they are the earlies investors, and in order to convince the other to still injecting money into the project, they have to satisfy the earlier investors, so the good word will spread around. At the end, those late investors always get nothing in return. They will lost on their investment. This pretty much similar to social security now. At the end, our investment will get nothing on us, right?