90 Years of Social Security—90 Years of An Immoral, Unsustainable System

In the name of respecting and protecting individual rights, let’s commit to phasing out Social Security over the next 90 years—or sooner.

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Back on August 14 I received an email from the Social Security Administration (SSA) titled “Social Security Celebrates 90 Years of Service to the American People.” It contained a few blurbs about how great the program is and a link to Commissioner Bisignano’s “An Open Letter to The American People,” a self-congratulatory harangue about the great strides the SSA is making to serve you and me better. Not a word mentioning the fact that Social Security is in deep financial crisis and that the system is deeply immoral. Jeez, thanks for the sugarcoated propaganda.

The truth is that an honest reckoning is long overdue. What began in 1935 as a limited safety net for seniors has grown into America's largest entitlement program (surpassed only by Medicare but that’s a topic for another day)—a system whose massive unfunded liabilities threaten to impoverish younger generations and whose very design is both economically reckless and morally indefensible.

The Social Security Trustees’ 2025 report is unequivocal: Social Security’s primary trust fund will be exhausted in 2033. When that moment arrives, unless Congress intervenes, benefits for all recipients will be slashed by more than 20%. The program faces a staggering $25 trillion shortfall over the next 75 years, and unfunded obligations over the infinite horizon now top $72.8 trillion. For every household in America, that liability averages almost $200,000—a fourfold increase since 2010.

How did Social Security arrive at this precipice? Originally envisioned as a self-financing retirement system, Social Security shifted decades ago to a pay-as-you-go model. Today’s workers fund today’s retirees. Politicians, meanwhile, have used trust fund surpluses to pay for unrelated government spending, leaving the trust fund holding little more than government IOUs. For the past 15 years, Social Security has paid out more in benefits than it collects in taxes, cashing in those IOUs to make up the difference.

Today, the number of workers per beneficiary stands at just three-to-one—a steep drop from five-to-one in 1960—and low fertility rates and longer life-expectancy mean even fewer future workers to support rising costs. Every delay in reform makes the problem worse and requires either future tax increases or benefit cuts or, most likely, both to restore balance.

The finances could be shored up relatively easily. But this would not address the fundamental immorality of the system. Social Security is a government-mandated transfer of wealth from the young and working to the old and retired, a setup bordering on intergenerational theft. The system is a massive violation of individual rights. Social Security, in effect, resembles a Ponzi scheme: current obligations are paid not from saved assets, but from the contributions of new participants. This model is fundamentally unsustainable and unjust. It forces younger generations to subsidize older. If this were a private scheme, its instigators would have been convicted of fraud and embezzlement—at a minimum—a long time ago. Furthermore, by distributing benefits according to arbitrary government formulas and political calculations, it often rewards those who contributed least and penalizes those who contributed most.

For years, lawmakers have proposed half-measures: raising the retirement age, increasing payroll taxes, means-testing benefits, or tinkering with formulas. These piecemeal fixes fail to address the root issues. They may delay insolvency but cannot restore long-term sustainability without catastrophic benefit cuts or punishing tax hikes. Many of these proposals trade major transition costs for modest, temporary fixes. They leave the system fundamentally unchanged, perpetuating its financial insolvency without addressing the blatant immorality of the system.

What’s the solution? Begin planning for Social Security’s orderly phase-out over the next 90 years, but preferably sooner. Yes, 90 years is a long time, but it would be equally immoral to pull out the rug from under those who have counted on the system for their retirement, hence the gradual phasing out. Here is my suggested roadmap from the book:

The following proposals constitute just one possible approach that, over time, will put you and me fully in control of planning and saving for our retirements:

1. Increase the Social Security retirement age

Increase the Social Security retirement age 1 year every 3 years until reaching the average life expectancy (currently around 78–79 years), bringing it back to the original intent when the program was implemented in the 1930s. Today’s 67 would become 68 in three years, 69 in six years, etc. The entire range of Social Security collection options from early (age 62) to late (age 70) would be adjusted accordingly. (A similar approach was part of the solution back in 1983 when Social Security last time was on the brink of insolvency.)

2. Reduce benefits

Reduce benefits from a certain cutoff date, allowing everyone who is, say, age 50 and above to collect in full once reaching the retirement age as calculated above. For everyone younger than 50, reduce benefits by, for example, 2.5% per year of age under 50. If you’re 49 at the cutoff date, you’ll collect 97.5% when reaching full retirement age; if age 48, 95%; if 40, 75%, and so on. That will allow for plenty of time to save up for retirement for those younger than 50.

3. Phase out inflation indexing

Today, Social Security benefits are indexed for inflation every year (COLA – Cost of Living Adjustment). Phase out indexing over, for example, 10 years, reducing the adjustment with 1/10 each year. This will significantly speed up the process of making the current system solvent. (It will also have the added benefit of putting pressure on politicians to keep inflation down to not reduce the purchase power of your social security check.)

4. Reduce Social Security taxes

Reduce Social Security taxes gradually to zero after all current liabilities have been funded (assuming the above gradual dismantling).

Taken together, these initiatives will soon put us on track toward transitioning retirement planning and saving from today’s rights-violating welfare statist model to a capitalist social system where your rights are respected and you’re fully in control of planning and saving for retirement.

The practical solution is not that hard, folks. What’s hard is to convince the American people that it’s morally Right to return control of retirement to individual Americans. Our politicians from the president down are following our lead—and the fact is that currently a majority of us seems to like Social Security for all its immorality. What’s required is a moral groundswell that makes our elected representatives take notice. Again, from the book:

If saddling your children and grandchildren with the cost of your retirement makes you feel morally uncomfortable you just added power to the moral groundswell. You may depend on the current “pay-as-you-go” system for the rest of your life. But you owe it to yourself to fight for phasing out the system to give those coming after you the opportunity to be in control of their own savings in retirement, without being at the mercy of taxpayers and the heavy hand of government.

What if you are not yet collecting Social Security? The fact that you and your employer are paying a combined 12.4% welfare tax to finance other people’s retirement needs and not your own should make you feel morally betrayed. Absent a change you will be a welfare case just like today’s retirees—if there is any money left to dole out when your time to collect comes around. So much for a “Golden Age.” Do you think this is a moral outrage? Congratulations, you just contributed to the moral groundswell as well.

Phasing out Social Security is neither radical nor reckless—it’s urgently needed and it’s morally Right. It respects existing commitments to retirees, provides younger Americans with greater control and ownership over their future, and restores intergenerational fairness. The phase-out plan prevents a sudden “cliff,” giving markets and families time to adapt.

This solution reduces the unfunded government liability gradually, shields the elderly from abrupt cuts, and incentivizes personal savings and responsibility. It ensures that future generations are free from the moral hazard and unsustainable promises that have long plagued Social Security.

And most importantly, it gradually restores morality to this area by returning control to individual Americans—by respecting each of our individual rights—to plan and save for our retirement without government intervention.