The Future of Social Security \ stacker news ~econ

pull down to refresh

7683 sats \ 44 comments \ @Undisciplined 7 Feb econ

By Karl Streitel Social Insecurity: It’s Not Wrong to be Concerned about Facts

Social Security is headed for reduced benefits, and no amount of political rhetoric or even tax increases will solve that problem. The numbers do not lie.

For decades now, younger generations of Americans have believed that Social Security will be defunct by the time we retire. It is hopelessly underfunded, so that seems pretty reasonable.

What specifically do people expect to happen with Social Security?

I think it's unlikely to be dissolved anytime soon and I also don't think people will tolerate the benefits simply being inflated away.

I see two reforms as highly likely:

Means testing (initially set at a very high level, but then it will creep down)
Increasing eligibility age to collect (progressively raise the age until the program is solvent)

There's an entirely different reform I'd prefer be considered:

Enact some sort of elder care, similar to child care, so that families are on the hook to provide for their elderly members before taxpayers are.

view all related items

1969 sats \ 7 replies \ @piecover 7 Feb

Social security and any gov retirement program are big scams. If you understand how inflation work, but also those program give the gov an incentive to kill it's old people faster so they don't have to get paid back their fair share invested

1016 sats \ 2 replies \ @Undisciplined OP 7 Feb

also those program give the gov an incentive to kill it's old people faster

During all the speculation about the origins of Covid, I couldn't help thinking about how it was killing exactly the population that's most inconvenient to the government.

26 sats \ 0 replies \ @piecover 8 Feb

200%

0 sats \ 0 replies \ @KeynesianClowns 8 Feb

deleted by author

767 sats \ 3 replies \ @KeynesianClowns 8 Feb

Same for companies with pensions, especially in blue collar settings. Get the older employees with many years vested to handle any harsh chemicals or make anything else excessively difficult. Any system that doesn't put the individual solely in control of their savings is BS. Institutions cannot be trusted.

26 sats \ 0 replies \ @piecover 8 Feb

Exactly, those institutions got unaligned incentives as well.

36 sats \ 1 reply \ @Undisciplined OP 8 Feb

There was zero chance defined benefit pensions were going to be managed well. It's just way too easy to over promise and under deliver. Plus, as you note, the incentives are completely perverse.

I would certainly prefer if people were just trusted to manage their own finances, but if we can't have that, at least defined contribution retirements are inherently solvent.

26 sats \ 0 replies \ @Bell_curve 8 Feb

Public sector pensions are immoral

872 sats \ 11 replies \ @DEADBEEF 8 Feb

Social security is basically a pyramid scheme. It was built on the premise that each generation would have more people paying in. Birth rates have totally collapsed over the last few decades. Also the retirement age barely changed to match life expectancy. When first passed the average life expectancy was about 65 - the same age as retirement.

The most likely outcome is that the age of eligibility will be gradually raised. So that means retirement should be raised to about 78 based off the current average life expectancy.

20 sats \ 9 replies \ @Undisciplined OP 8 Feb

It was built on the premise that each generation would have more people paying in.

and the lie that each generation was only taking out what they had already paid in.

They run into an interesting problem raising the age, though: it basically becomes a retirement fund for white people, given discrepancies in lifespan.

36 sats \ 8 replies \ @Bell_curve 8 Feb

Who wants to work past age 65 regardless of social security eligibility!!!

20 sats \ 7 replies \ @Undisciplined OP 8 Feb

You're allowed to retire before you withdraw social security. It's not unreasonable to think someone might not be destitute the moment they quit working.

48 sats \ 3 replies \ @Bell_curve 30 Aug

You can tap into your IRA and 401k starting at age 59.5

31 sats \ 2 replies \ @Undisciplined OP 30 Aug

You can actually borrow from them before that, as I understand it.

57 sats \ 0 replies \ @DEADBEEF 30 Aug

That’s true and then you pay that loan back into your 401k.

38 sats \ 0 replies \ @Bell_curve 30 Aug

I think it's penalty free for 60 days per calendar year

otherwise, the penalties are steep (10 percent plus income tax on the amount borrowed)

My cousin dealt with something similar a few months ago, avoided penalty after borrowing from IRA/401k

36 sats \ 2 replies \ @Bell_curve 8 Feb

Good point… so many seniors are destitute though especially in nursing homes

20 sats \ 1 reply \ @Undisciplined OP 8 Feb

Medicaid covers nursing homes, but I agree that it's a sad situation.

27 sats \ 0 replies \ @Bell_curve 8 Feb

Medicaid is a badge of poverty

36 sats \ 0 replies \ @Bell_curve 8 Feb

deleted by author

666 sats \ 4 replies \ @TomK 8 Feb

if i may add my two cents here as a european, i must say that the economic decline and the inclusion of the ponzi schemes that we call social security is continuing, it seems to me that the only solution to this problem is the reactivation of the family as the stem cell of society. this is a cultural process that the state cannot control, thank goodness, because we will all activate it automatically when the time comes.

26 sats \ 0 replies \ @Bell_curve 8 Feb

Agree 1000 percent

31 sats \ 2 replies \ @Undisciplined OP 8 Feb

this is a cultural process that the state cannot control

Maybe not directly, but the state has crowded out the family in many social roles.

26 sats \ 1 reply \ @Bell_curve 8 Feb

Look at blacks and native Americans in USA. Welfare dependency and single or zero parent households

10 sats \ 0 replies \ @Undisciplined OP 8 Feb

yep

748 sats \ 1 reply \ @KeynesianClowns 8 Feb

The benefits are being inflated away already (and have been for years). Sadly, I just don't think there is enough economic literacy in the general population at this present time (hopefully the BTC community and other sound money advocates can change this over time) to understand how severe the screw job is.

Regarding the format of SS, it's simple math that an increasing ratio of retirees to workers paying into SS will deplete the pool of funds over time (especially as real wages decline). This has been a trend for several decades due to the size of the baby boomer generation (again, simple math). I also agree that the eligibility age will likely be raised as at least part of the reforms. It will be interesting to see what rhetoric the state uses at this time (and who they get to fall on the sword).

78 sats \ 0 replies \ @Undisciplined OP 8 Feb

I didn't mean to imply they wouldn't or aren't inflating away the value of social security payments, just that they won't solely rely on that.

737 sats \ 0 replies \ @OriginalSize 8 Feb freebie

I think they'll try to boil us like frogs, raising the age and requirements as you said. Add in inflation and it'll be annoying but look, for many of us, we have no expectations so no heavy lift required. We'll just work until we die or the sats provide for retirement.

Still, the masses will want more and more for nothing, so it'll fit in with UBI, more inflation, living where it's cheap, eating what's free. The survival instinct is strong but violence doesn't really work. I think there's going to be a lot of pressure to be grateful for what you get.

534 sats \ 4 replies \ @03479d0ee6 8 Feb

The best solution for SS would be to just print it. You would retire and get what you deserved based on years worked, salaries and age of retirement, the same as today. The gov would print out of thin air the payments.Yes there could be some inflation but it would be manageable. Instead there is this whole gymnastics with taxes, age of retirement rising, still not enough funds and we still get inflation, just to keep the charade so that that normies don't realize that money can and is printed out of nothing.

0 sats \ 3 replies \ @Undisciplined OP 8 Feb

One of the issues is that you don't get what you "deserved based on years worked, salaries and age of retirement". People live much longer than they used to but don't retire correspondingly later. That means those withdrawing today are getting far more benefits than the program was designed for.

I'm sympathetic to the "just print it" solution, though. As you say, it's much more transparent what's happening. Also, those of us who see it as a problem can opt out of holding dollars.

565 sats \ 2 replies \ @03479d0ee6 8 Feb

The number of years and life expectancy isn't the biggest problem imo, that's an excuse to not pay what you should receive, the problem is birth rates, the current work force is smaller than the previous one that is going into retirement, birth rates are lower bc of costs of living (inflation), less workforce, less funds, solutions: direct penalty in the value or in time? Time is the easiest. People are talking about UBI for people that are in active age and for retirees we are cutting entry age, makes no sense. Just print it, and remove that tax from the working force,that's why many countries accept immigration, to increase work force number. We must keep in mind that these systems worked while the fiat system worked and was expanding, now it's breaking and there is bills to pay, so all these systems are breaking, the underlying problem is the same, and all the solutions so far is taking your money to pay these bills. Would be better for govs to just come clean, print it.

10 sats \ 1 reply \ @Undisciplined OP 8 Feb

I don't think I disagree with any of that. However, saying low birth rates are the biggest problem is a bit like saying "gravity is the biggest problem in plane crashes." The birthrates are what they are and there's no way to instantly make new working age adults (immigration is the closest thing to that).

Given the demographic situation, adjusting program eligibility is the best way to improve its financial solvency.

26 sats \ 0 replies \ @Bell_curve 8 Feb

deleted by author

39 sats \ 1 reply \ @Bell_curve 10 Feb freebie

How about having a real social security trust fund?

It didn’t take long for the politicians to discover that the Social Security “trust fund” could be raided for immediate spending. This was done by having Social Security hold the “trust fund” in government bonds, which meant that the asset on one side of the government was just a liability on the other. This has gone on for decades and the last time I recall anybody railing about this shell game was during the Reagan administration.

If Social Security were really a pension plan, there would be no problem at all coping with demographic changes. Simply taking the current level of worker and employee “contributions” and investing them in a classic conservative “sixty-forty” portfolio (60% stocks [say, an S&P 500 index fund], 40% investment grade bonds), the funds would have grown over time to be more than adequate to pay retirees.

21 sats \ 0 replies \ @Undisciplined OP 30 Aug

I think I learned about this from either a Stossel segment or Milton Friedman.

30 sats \ 1 reply \ @Bell_curve 30 Aug

The solution is to privatize social security and gradually reduce and eliminate the payroll tax. The current financial trajectory is unsustainable.

Means testing means it is a poverty program not entitlement.

Maybe increase age of eligible to 70 years, anything beyond 70 seems unfair actuarially

I like your elder care proposal.

21 sats \ 0 replies \ @Undisciplined OP 30 Aug

When you consider that the original age of eligibility was basically the same as life expectancy, it wouldn't be crazy for eligibility to be raised to 80. I think that could be done gradually, especially with how they've changed the withdrawal formula to allow early and late withdrawals.

I used to be in favor of means testing, because I thought of it in the same terms as other welfare programs, which is how it's treated by the government. Your point made me think, though, that the current program is a forced loan to the government, whereas means testing would make it outright theft.

415 sats \ 0 replies \ @janetyellen 8 Feb

Social security does work! My friend, Klaus, has a proposal to fix it:

Eat de fiat foodz and de bugz (proper nutrition is essential for a long life)
Take de vaccines (you will not drop dead young, trust the science)
Don't own anything (you will rely on the state to provide, the state always provides)
ESG (you won't run out of energy, trust me)

You will ~~NOT~~ die young and Socialism security will prosper for the next generation

305 sats \ 1 reply \ @UCantDoThatDotRugged 8 Feb

was expecting a giant picture of a toilet in here

0 sats \ 0 replies \ @Undisciplined OP 8 Feb

Be the change

27 sats \ 0 replies \ @Cowboy 8 Feb

Bitcoin is the future!

26 sats \ 1 reply \ @Bell_curve 8 Feb

Privatization like Chile

10 sats \ 0 replies \ @Undisciplined OP 8 Feb

I hope so

0 sats \ 0 replies \ @SaToSHiWoMaN 10 Mar outlawed

stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.