It's nothing of the kind! That is an unsubstantiated myth. The system is sound, so far, from the actuarial standpoint but needs urgent tweeking to adjust for changing demographics. Congress is remiss in not doing this forthwith.
However, there is a very serious problem affecting social security in the US that has nothing to do with actuarial soundness, and that is the credit worthiness of the U.S. The money owed by the government to the Social Security Trust must be borrowed by the Government to pay back the Trust. Starting about now the S.S. system will no longer produce much if any of a surplus that can be borrowed by the government at artificially low rates, and within a few years the system will need to start calling its "loans" made to the giovernment. That is going to accelerate the pressure on Treasury and the Fed to monetize more and more of the debt, and that should in turn lead to higher inflation. But since the official government inflation figure underestimates real inflation in the cost of living, social security retirees will get cheated.
The best way to fix this system in my view is to allow a wider range of investment of social security assets including foreign investment along with a modest increase in premiums graduated toward the upper end of the income spectrum and a raising of the cap disproportionately to the increase in benefits at the high end.
There are compelling reasons why an entirely privitized retirement system for the vast majority of American workers is a terrible idea. The main one is that low income workers can not afford to lose the benefit of shared risk that defined benefit retirement plans such as Social Security offer.
What this means in practice is that one has to make smaller monthly contributions to reap a set benefit than one would if risk was not shared and those who died young did not subsidize those who live longer. No one knows how long they will live!
