Established during the Great Depression, the Social Security retirement system is funded by a 12.4 percent tax, split between workers and employers, on all wages up to $113,000.

It's the nation's oldest entitlement program and one of its most beloved. Yet it's also a fiscal and demographic disaster that desperately needs to be reformed right now for at least three reasons.

1. Social Security is broke.

Social Security is already paying out more in benefits than it brings in via payroll taxes; it makes up the difference by drawing on surpluses built up over the past decades. According to the most recent report by Social Security's trustees, those surpluses will be totally gone in 2033 and unless taxes get jacked up, the system will only be able to pay 75 percent of current benefits.

1. Social Security is a terrible investment.

People think of Social Security as a retirement account, but it yields a terrible rate of return. Researchers at the liberal Urban Institute estimate that virtually all people retiring in 2010 or later will receive far less in benefits than they paid into the system via payroll taxes. Nobody would stand for that in a voluntary retirement plan.

1. Social Security Screws Younger Workers.

Not only will younger workers get smaller benefits -- if they get any benefits at all -- we have no control over our contributions. What's more, we can't will savings or unpaid benefits to heirs. The result is less disposable income now -- and in retirement.

Whatever sense it may have once made, Social Security is now a program that is insolvent and unfair -- and that will only get worse as the baby boom generation starts retiring en masse.

If we want to protect seniors from poverty in old age, we should address that directly through welfare payments to the truly needy rather than creating a system that pits one generation against the other.

Written and narrated by Nick Gillespie. Produced and edited by Meredith Bragg.

About 2 minutes.

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