For better or worse, Social Security is our nation's most important social program.

Each month, close to 63 million people receive a benefit check, nearly 70% of whom are retired workers. More than 3 out of 5 of these retired workers lean on their monthly payout for at least half of their income. And this income is responsible for keeping approximately 15.3 million of these retirees out of poverty. In essence, without the guaranteed payout provided to eligible beneficiaries, the elderly poverty rate would be more than four times higher than it is now.

And yet, Social Security finds itself in a pretty serious long-term bind.

A Social Security card standing up on a table with the name and number on the card blurred out.

Image source: Getty Images.

Social Security is in trouble -- who's to blame?

According to the June-released Social Security Board of Trustees report, America's most important social program was expected to begin spending more than it collects in 2018, with these net cash outflows beginning to significantly grow in size in 2020 and beyond. Even with close to $2.9 trillion in asset reserves, the program is expected to have its excess cash coffers bled dry by 2034. Should this happen, a sizable benefit cut of up to 21% may be needed for then-current and future beneficiaries. Considering seniors' reliance on Social Security, it's a grim forecast.

As you can imagine, the American public places a lot of blame for Social Security's woes on the federal government. Peruse any social media site or Social Security article commentary and you're bound to find claims that the "federal government should pay back what they've borrowed with interest," and that Social Security should "stop giving money to immigrants."

Of course, what these commenters fail to realize is that Social Security is set to generate more than $800 billion in interest income from the federal government's borrowing over the next decade. It's already paying interest into the program in what's a mutually beneficially borrowing arrangement that's required by law. If this borrowing were to end, the program would be in much worse shape than it is now.

Commenters should also know that only legal immigrants who've likely put in decades of work, and paid payroll tax, are eligible for traditional Social Security benefits. Many of the arguments surrounding government culpability just aren't correct.

A surprised senior man tightly gripping his piggy bank as outstretched hands reach for it.

Image source: Getty Images.

You're completely misunderstanding Social Security's purpose

But there's one misunderstanding that perhaps tops the rest -- one that hits the core of Social Security's purpose. Namely, the idea that what workers pay into the system is "their money."

This idea that what workers pay into the system should become theirs at a later date is incorrect for one key reason: Social Security was never designed to be an investment tool. Rather, it's a social investment in elderly workers who can no longer provide for themselves. It's the inability of the American public to recognize that this is a social, not financial, investment in the elderly workforce that leads to so much misunderstanding.

Some folks have described taking money from one generation and giving it to another as nothing more than a government Ponzi scheme. For those of you unfamiliar with the term, a Ponzi scheme describes a type of fraud whereby early investors are paid off with a hefty return by using the investment money provided by more recent investors. In the case of Social Security, some people believe that their payroll tax revenue is being used to fund future generations of workers, and that when they retire the jig will be up, so to speak, and nothing will be left.

But Social Security isn't a Ponzi scheme, namely because Social Security isn't out to make money. Less than 1% of the program's expenses head toward administrative fees, such as paying the salaries of Social Security Administration (SSA) employees, as well as the rents and electricity bills for SSA offices. That means more than 99% of what goes into the system gets paid back to eligible beneficiaries. In fact, it's one of the most cost-efficient social programs in the federal government.

A senior man counting a fanned pile of cash bills in his hands.

Image source: Getty Images.

Another problem with the "it's my money" thesis is that it goes against what Social Security stands for. It was designed in the mid-1930s to provide a financial foundation for lower- and middle-income seniors who can't provide for themselves. Even the SSA today suggests that the program will only replace about 40% of the average worker's wages in retirement. If folks simply received what they paid into the system, lower-income workers would be in some very big trouble come retirement.

The system is designed to provide a greater lifetime payout for lower-income American workers than what they put in, with the opposite true for more well-to-do workers. This isn't a conspiracy. It's a social investment in our collective elderly labor force.

If you want to blame the government for something, make it be the thumb-twiddling they've done on Capitol Hill while having multiple viable long-term solutions at their disposal. But don't fault the program for doing what it was intended to do.