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[quote user="henry6"] Of course a retirement fund is undefined here.  So, for the sake of arguement, lets define.  1) personal retirement fund is one in which an individual invests in hopes of having saved his money and earned interest so that it is more than just his investment in the long term.  2) a retirment fund plan like SS or RR which individuals pool funds and the orginization itself will invest the accrued monies so that at least there is no loss, but should, overall, reap interests to cover cost of administering and return same to those who subscribed to it.  SO, SS and RR is of the latter and with a portfolio that should keep invested funds at least intact...and with more individuals putting into their accounts, the more there is to invest and return.  As long as more people put in than take out, it should work.  But an individual cannot spread his own money wide enough, even with Mutual Funds, to save and get a return as is done with SS or RR. [/quote] Social Security Funds are not invested.  The surplus pay taxes have been borrowed by the federal government for general purposes.  In exchange for the use of the funds, Social Security has been given non-marketable Treasury Notes.  Theoretically, they earn six per cent per year.  In fact, they don't earning anything.  The interest is accrued by the Treasury.  When it redeems the notes, as it was forced to do in 2010, and will be forced to do so in ever increasing amounts rolling forward, it had to borrow the principal plus the accrued interest.   The notion of the Treasury paying interest on the monies that it has taken from the Social Security Trust Fund is akin to a person paying his or her mortgage with a credit card.  The interest and principal on the mortgage are reduced, but the credit card debt increases.  At the end of the day it is a losing game game, i.e. the general tax burden has increased.   Most Americans, unfortunately, don't understand how Social Security works.  Many of them believe that it is a retirement account akin to the plan of their employer, etc.  Nothing could be further from the truth.  Social Security is a tax transfer scheme, as I noted in my previous post.
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