Prior to FDR's creation of Social Security in 1935, people relied upon their families to take care of them in their retirement years. And in fact, there were no expectations of a 'benevolent government' using the General Welfare clause of the Constitution to do for them what was their responsibility since the beginning of time.
But with the advent of Social Security, the government opened the door to a whole myriad of programs to virtually take care of people from cradle to grave, and has used the power of taxation to force everyone to pay into it whether they wanted to, or even needed to at all.
It is now 80 years later following this momentous act passed during the height of the Great Depression, and because of a combination of Demographics and Congressional greed, the program is insolvent and by some analyst's measures, could be completely bankrupt as early as 2017. And the real question that has to be asked is, is the government responsible for providing these retirement benefits no matter what, or can they simply dissolve the program at will if they decide they can no longer afford to pay for it?
The answer unfortunately may scare some people, because the question itself was resolved back in the 1950's by the Supreme Court.
Most people see Social Security as a contract between themselves and the government. You pay money into the system, and the system pays it back at a later date—guaranteed by law.
But nothing could be further from the truth…
You have no choice when it comes to paying your Social Security tax. It comes out of your paycheck automatically.
But did you know the government isn’t under the same rigid contract?
In fact, by ruling of the United States Supreme Court, the federal government is under no obligation to pay you a Social Security check.
This is the clear precedent set in the case of Flemming v. Nestor.
Ephram Nestor was an immigrant from Bulgaria. He moved here in 1918 and paid Social Security taxes from the very beginning of the program in 1936.
In 1955, when he retired, Nestor began receiving Social Security checks for $55.60 per month.
But, just one year later, Nestor was deported. Turns out, he’d been an active member of the Communist Party in the 1930s, giving the U.S. government grounds to kick him out.
When he was deported, his Social Security checks stopped. Nestor sued the U.S. government, arguing that, since he had paid money into the program, he had a right to those benefits.
The Supreme Court ruled against Nestor, saying the government had the right to terminate Social Security at any time.
The people who sign the Social Security checks sum it up this way:
[Nestor] appealed the termination, arguing, among other claims, that promised Social Security benefits were a contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not a contractual right.
Takeaway: You have no contractual right to Social Security.
That historical precedent means it has the power to cut Social Security anytime it wants. - Casey Research
And it is why nothing has ever changed in life... and it is you and I who are responsible for our own retirement savings programs.