Source: Social Security Administration.
Social Security benefits are vital for millions of retirees. But some politicians don't like the program very much, and one recently compared the program to welfare. Does that claim make sense?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at comments made by Maine Governor Paul LePage suggesting that programs like Social Security constitute welfare. Dan notes that from one standpoint, Social Security has something in common with welfare programs in the sense that Social Security takes tax money from current workers and uses it to pay benefits to retirees. That makes Social Security a type of wealth-transfer system. But Dan also points out that the way most people understand Social Security -- i.e., you pay taxes now in the expectation of receiving benefits in the future -- differs greatly from Social Security generally. Dan concludes that Social Security will always be political, but that doesn't mean you shouldn't take into account the benefits you're entitled to receive in your financial planning.
