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[quote user="Bucyrus"] Considering the amount that employees and employers contribute to RRR as payments, is this money invested in a way to provide a return over time?  So, when a person retires, will he or she receive a benefit that returns a profit on the investment?   This is what is missing from social security.  Is it also missing from RRR? [/quote] The financial aspects of various retirement plans is a very complex subject.  It usually takes a small library of relevant books to understand all of the dynamics. Retirement in the United States is usually funded from three principle sources, sometimes referred to as a three legged stool.  For most people retirement monies come from Social Security (Railroad Retirement), legacy retirement or employer sponsored 401(k) and 401(m) plans, and personal investments and savings. Social Security is not a retirement account. It is a tax transfer scheme. I don't know about Railroad Retirement. Workers pay payroll taxes: they pay all of it contrary to popular belief, and the monies are transferred to beneficiaries, i.e. retirees, survivors, and disabled persons.  Until 1985 Social Security was a pay as you go system, which meant that the amount of the payroll tax was determined actuarially to cover the expected number of current beneficiaries.  However, in 1984 or 1985, I don't remember the exact date, as a result of a recommendation by the Greenspan Commission, the combined payroll taxes were increased to build a surplus in the Social Security Trust Fund in preparation for the bubble in benefits anticipated because of the retirement of the baby boomers beginning in 2010.Instead of investing the monies, the government used the surplus to fund general operations.  The Social Security Trust Fund received non-marketable notes from the U.S. Treasury in exchange for the surplus funds.  As benefits exceed revenues, which they did beginning in 2010, the Social Security Trust Fund must redeem some of the notes to pay for the benefits.  The Treasury does not have any surplus funds, to it has to borrow the money in the open funds markets to redeem the notes. Monies paid into a legacy pension fund or a 401(k)(m) fund usually are invested in a variety of securities. The pension fund and the 401 funds are managed by an independent fund administrator.  Most of these funds earn substantial returns. This is true not only for railroads and businesses; it is also true for state and local government employees, teachers, university professors, etc. In fact, the Texas Teachers Pension Fund is one of the best managed funds in the United States; in fact, it is one of the best managed funds in the world. In the case of federal employees, including retired military personnel, their retirement benefits are paid out of operating funds. Personal savings are invested according to the risk profile of the saver.  The safest bets are CDs, which are guaranteed with restrictions by the FDIC, Treasury Notes, etc.  Risker investments include bonds, stocks, etc.  The key to personal savings or investing of any kind is diversity, which is necessary to spread the risk. There are risks associated with any form of investment, including so-called government retirement programs. A business can go bankrupt, in which case its pension plan, assuming that it was qualified, will be taken over by the Pension Benefit Guaranty Corporation.  If this happens the beneficiaries may receive a reduced benefit, but only a small percentage of retirees find themselves in this position. If a person invests in overly risky securities, i.e. junk bonds, speculative stocks, etc. he or she can lose some or all of their stake.  On the other hand, if they are too conservative, i.e. over concentration in CDs, Treasury Notes, etc., they may not have enough money for retirement, irrespective of whether they worked for a railroad or the government or whoever.  Note my tying this discussion back to the railroad industry. There are risks associated with Social Security.  The government is not contractually obligated to pay Social Security benefits.  It could pull the plug on them at any time, as per a Supreme Court ruling regarding the payment of benefits to a foreign national who worked in the United States for more than 25 years but retired to a country that the U.S. deemed a terrorist nation.  In addition, Social Security has changed the guidelines for benefits on numerous occasions, i.e. age required to qualify for full benefits, increase in the payroll taxes, taxability of benefits, etc.  Each of these changes in effect has reduced the value of the program for some or all of the participants.  An overriding risk for all of the aforementioned retirement schemes is under funding.  This is true for business, state and local governments, Social Security, etc.  Many retirement plans are in serious trouble, including Social Security, because the policy makers over promised on benefits and, further, because retirees are living much long than had been anticipated.
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