Monday, August 30, 2010

Happy Birthday Social Security

Social Security Poster: old manImage via Wikipedia
Social Security becomes 75 this month and it time for it to retire. You have the baby boomers starting to access benefits and some say this will crash the whole system.  
All my life there has been the doom and gloomers predicting the last breaths of this antiquated system. Crisis of insolvency have been heard around Washington DC for years. With good reason, every year the Social Security Board of Trustees issues it yearly report. The report is usually bad. This year their report states that social security will be broke by the year 2037. According to this year costs will exceed revenues. In the year 2037 if benefits are reduced to 75% the money can go all the way to 2084. 
The accuracy of these estimates are determined by social security administration. It's probably the only federal institution that plans things out that far. According to the Social Security Administration they have to project out this far so minor adjustments can be made so that payments can continue to flow. 
Supposedly they actually have been planning for the retirement of the baby boomers since 1955 when they noticed fertility rates increasing in 1946. They have been watching all these years and waiting. They do lots of preparation as do life insurance company's. They know if Congress doesn't act to fix Social Security they are able to pay benefits in full for the next 27 years and pay benefits of 75% from then on. 
The only ideas to fix social security they have, are only ones that are consisting of more taxes. Another is raising the retirement age to 70 years old. Both options would face resistance by the American people. The American people want to keep Social Security the way it is and not be worrying about it. 
Other ideas our that retirement age should be raised to 70 years old. Also phase out people 45 years old and younger completely. People 46 years old and up will get complete benefits. Those younger will take their social security contribution and put in a brokerage account like an IRA with mandatory contributions. Supposedly this account would appreciate and produce comparable payouts upon retirement at 70 years old. 
A rebooting of Social Security is called for. Many a multi plan solution consisting of many different ideas could be initiated. But the final solution in the years to come would be a total dismantling of it completely. The original safety net has grown unwieldy. We can't afford it and can't manage it.  

1 comment:

  1. Social Security is a castle built on sand at best, and a plain old fashion Ponzi scheme at worst. Unfortunately many Americans depend on SS for a large chunk of their retirement income. There seems little question that contributions will have to be raised, benefits cut, and means testing implemented to keep this program solvent. I wish there was a way to opt out of it, especially for my children. But it is a giant slush fund for Congress to tap into. I've read numerous studies that indicated the real investment return on contributions is 0 or even negative. Too bad we can't put that money to more product use.


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