Friday, July 31, 2015

Social Security: going bankrupt one statement at a time?

An article in National Review points out an interesting feature of the author's Social Security statements.

I saw an asterisk with the following message:

The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits.

I could not believe I was seeing the equivalent of what I was just thinking, but with a new twist, “If I like my Social Security, I can keep 77 percent of it.”

With an asterisk, my beloved government was informing me that they will be unable to fulfill their part of a financial arrangement into which, as their statement attested, I had been making mandatory contributions starting in 1971 at age 16. 

This impending “benefit rationing,” reducing my future financial “security” by $492 a month, may, in fact, not be the worst of it.

Sitting in the back of my Social Security file was an earlier statement dated March 10, 2009. Again, followed by an asterisk was a sentence that read exactly like my 2015 statement except for two major differences (emphasis added):

The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 78 percent of your scheduled benefits.

Clearly, in 2009, the government’s prediction — that Social Security would have to be cut to 78 percent of benefits come 2041 — was overly optimistic.

Now, in 2015, they are projecting 2033, eight years earlier, with one percentage point less of my projected benefits. The projections have steadily worsened over the past few years, helped by a much weaker economy than the federal government expected. Does anyone really expect these numbers to get better?

. . .

Meanwhile, here is the truth, as stated by the Social Security Administration in its annual Trustees Report from 2014:

Social Security is not sustainable over the long term at current benefit and tax rates. In 2010, the program paid more in benefits and expenses than it collected in taxes and other noninterest income, and the 2014 Trustees Report projects this pattern to continue for the next 75 years.

. . .

The population of retirees is projected to double in about 50 years. People are also living longer, and the birth rate is low.

. . .

Trustees project that the ratio of 2.8 workers paying Social Security taxes to each person collecting benefits in 2013 will fall to 2.1 to 1 in 2032.

. . .

So, barring some positive developments, in 18 years — or less — Washington, D.C., will be filled with aging protesters, many using walkers, wheelchairs, or scooters. They will carry signs reading, “Give me my full benefits” and “It’s my money.” Old men wearing Vietnam veteran caps will be demanding, “100 percent and no less.” By that time, it will be too late.

There's more at the link.

As we noted on Wednesday, the so-called 'Social Security trust fund' may exist in theory, but it certainly doesn't exist in practice.  Those who argue that their Social Security taxes were 'an investment' that must now be 'repaid' have no idea of reality.  Their contributions have already been squandered on other entitlement programs, by both sides of the political aisle.  Now that it's their turn, there's nothing left in the kitty - except artificially created, inflationary pseudo-dollars - to pay them . . . and they're going to suffer the consequences.

Don't bet on Social Security to fund your retirement.  It won't.  It doesn't matter whether Republicans or Democrats administer the program.  Both parties have run it into the ground.



Old NFO said...

That they have... dammit...

Bruce said...

And we have allowed them to, we have also allowed ourselves to be deluded by the media's continuous demonizing of every plan put forth to correct the problem. Sorry, but SS needs to be privatized now, and the plan that the last Bush administration put forth was a very good place to start. Along with actually breaking the SS account out of the general fund and completely blocking access to it by those idiots in Congress.

BigFire said...

I'm 100% not counting on Social Security. If I see a dime out of it, I'll be pleasantly surprised. Otherwise, it's just a great sucking sound out of my weekly paycheck.

ws1835 said...

First - SS was always a tax scheme masquerading as an old age pension.

Second - That referenced statement has been on the bottom of my annual statement for as long as I can remember.

- ws1835

kamas716 said...

I remember similar warnings back when I was in high school. I figured I would never see SS, so I started contributing to my supplemental retirement accounts as soon as I got a full time job. At this point I consider anything I get from SS to be a bonus that I can use as mad money.