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What I Think I Know

“Just trying to do the hardest thing of all – to understand”

More people are going to want money paid out for a lot longer… from an account that has no money in it. No amount of financial smoke and mirrors will prevent the system from collapsing under its own weight

More people are going to want money paid out for a lot longer… from an account that has no money in it. No amount of financial smoke and mirrors will prevent the system from collapsing under its own weight

December 3, 2016 Nate

Palm Beach Letter April 2016

There are no real assets in the Social Security trust fund.

Now, add a couple of more problems to the mix. Social Security has had two problems from the start.

The first is retirement age. When the government designed the program in 1935, it set the retirement age at 65. At that time, the average life expectancy of a newborn was just 59 years. Most people wouldn’t live long enough to collect benefits.

But the framers of Social Security didn’t address the possibility that life expectancies would increase. Today, life expectancy in the United States is 79.9 years.

The second major problem is demographics. When Social Security began, there were 41.9 workers for every retiree. It isn’t too difficult to fund a program where more than 40 workers support a single retiree.

But now, in 2015, there are just 2.8 workers supporting every person collecting Social Security benefits.

By 2030, the ratio will be 2:1.

There you have it. Zero dollars in the trust fund, higher life expectancies, and a big wave of people claiming more benefits.

Takeaway: More people are going to want money paid out for a lot longer… from an account that has no money in it.

No amount of financial smoke and mirrors will prevent the system from collapsing under its own weight.”


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Democracy, Economics, Money, Politics

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