First, a simple question: At retirement would you rather have a million dollars or social security benefits?

The answer to that one should be pretty simple. What boggles the mind, though, is that the former is not altogether impossible; in fact it may be more likely for those in Generation X or younger to save a million dollars than for social security to still be solvent when they retire.

Social Security has been a tremendous source of debate recently – an issue that becomes one of contention from time to time – particularly with the Republican candidates for the 2012 presidential election. Rick Perry has taken plenty of heat for referring to social security as a Ponzi scheme.

Since Social Security was created in the 1930s it has been a controversial issue; becoming only more contentious as the federal government borrowed against the trust to finance other government programs. The idea that it is a Ponzi scheme is certainly nothing new – Charles Ponzi having perpetrated his fraud that coined the term before the Social Security Act was ever passed.

The argument over whether Social Security is a fraud, heated though it is, is quite frankly overdone and irrelevant – not that it is near its end. No offence to Tea Partiers, but the odds of successfully seeking charges against the United States federal government for fraud seems somewhat low.

What can’t be argued about the United States Social Security System is whether it is a good investment plan for Americans. It is absolutely apparent to anyone who does the math that, fraud or not, Social Security is a loser from an investment perspective.

Supporters of social security, due to their lack of investment knowledge and ignorance of time value of money, often argue that Social Security is a profitable system for its participants. They point out that under the current system, Americans are repaid all their contributions in just 5 or 6 years, and that everything paid out after that is a gain to the contributor. This completely ignores the time value of money; and how it grows over time. So let’s do the math:

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Barack Obama’s money train has steamrolled uncontrollably across the country, compiling record-breaking budgets, deficits, and debt along its path. Now, the train is running out of fuel, and the nation’s retirement money may find its way on board, to keep the train on the tracks.

Earlier this year, the U.S. Treasury and Labor Departments began a public discussion on the aim to convert 401(k) saving plans and Individual Retirement Accounts (IRAs) into annuities and other forms of guaranteed income streams. Deputy Assistant Treasury Secretary Mark Iwry stated, “the question is how to encourage it, and whether the government can and should be helpful in that regard.” The supposition that the government is looking to be helpful with this proposal should automatically cause alarm.

The rationale for what would ultimately serve as a government takeover of the nation’s private pension system is of the same mold as the position Obama and Congressional Democrats have staked throughout the debate on health-care reform; “trust us, we know better than you”. Their assertion is that a weakened economy and a volatile stock market call for them to protect you and your interests, in this case your retirement money.

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