If kept on the current path, the Social Security trust fund will be nothing more than an empty pot by 2040, according to a Congressional Budget Office (CBO) report. The disability insurance fund will die faster, as soon as 2017. “Don’t cut my benefits” is no longer an acceptable answer. An honest discussion is necessary, and this discussion needs to cover everything from cutting benefits, to means testing, to raising taxes, and even to eliminating unnecessary benefit programs. Does everyone need the death benefit, or just those in poverty? Should we try and scale back benefits over time so eventually there will be no more Social Security? What effect will increasing the retirement age have?
Contrary to popular belief, you don’t get out of Social Security what you pay in. Some get more and some get less, based on a variety of factors from income to marital status. Even divorcees can often receive benefits based on their ex-spouse. For many what was meant to be a supplement has become a sole source of income. Of course you also have those who don’t need the help and are milking the system. So with all this, along with the baby boomers entering the retirement pool, it’s no wonder Social Security pays out more than it takes in. As the percentage of the population over 65 grows, this will only get worse.
This is not a senior citizen problem. This is a 40-year-old problem. The fund is fine for those at or nearing retirement. It is the 45 and under who will be paying into this their whole lives only to find that there is nothing left when they retire. We are driving off a cliff while people are arguing over whether to turn right or left. If we can’t act like adults and get out of these entrenched positions to have an honest discussion, there will be no discussion. The cliff is getting pretty close, so what’s it going to be?
Social Security - Podcast - The Adam Goldfein Show
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Adam, I agree that the program needs to be fixed sooner rather than later and it can be done if Congress and the Executive Branch would have the courage to do so. Unfortunately, when suggestions are made it becomes a political football, with each party typically scaring people about the fixes.
I do disagree with your comment about the pot being dry in 2040. All the studies I have read typically state that if nothing is done monthly payments would be just over 70% of what they would have been for a retiree, based on income and outgo to the system.
If you have seen a different study regarding the "pot going dry" I would be interested in a reference.
I have enjoyed listening to you this week while Clark was out.
I think the "pot" was referring to the Old Age & Survivors Insurance trust fund, which the Congressional Budget Office predicts will be exhausted by 2040. At that point, outflows will be limited by inflows, which is perhaps where you got the 70% figure.
Here is a link to the CBO report: http://www.cbo.gov/publication/41644
I am willing to forfeit what they've taken from me, if I can invest my own money in an IRA or mutual fund from here on. I am 37 and pouring money in a hole I'll never see. I'll take the chance on myself and accept responsibility for myself and my family.