The government has just pulled a Madoff. They have admitted that they don't have the money to pay everyone out they have promised to pay out via Social Security. Specifically, those under 30 are going to get really screwed.
Business Insider's Bruce Kasting explains how bad the situation is, but keep in mind that this is based on CBO projections, and there is no chance the CBO has run the truly negative scenarios, where the government can't pay its Treasury debt--which is mostly what the Social Security Trust fund holds. Factor that in and the odds drop for everyone that they are going to get paid in full :
CBO looked at all of the scenarios regarding Social Security. They ran a total of 500 simulations that reflect the different variables of the puzzle. The analysis assumed that there would be no changes in current law on SS. The objective of the exercise was to quantify the probabilities of which generation would most likely not get the benefits they were (A) paying for, (B) entitled to and (C) expecting.
The results of the CBO analysis is that there is societal/economic trouble in front of us on this issue. It should come as no surprise to readers that if you are young, you have a problem. The CBO report defines which generation(s) will be hurt and by how much. I found their conclusions to be very troubling.
If you were born in the 1940’s the probability that you will receive 100% of your scheduled benefits is nearly 100%. The people in this age group will die before SS is forced to make cuts in scheduled benefits.
If you were born in the Sixties things still do not look so bad. Depending on how long you will live the odds (76+%) are pretty good that you will get all of your scheduled benefits. However, if you were born in the Eighties you have a problem. The numbers fall off a cliff if you are between 30 and 40 years old today. In only 13% of the possible scenarios you will get what you are currently expecting from SS. If you were born after 1990 you simply have no statistical chance of getting what you are paying for. The full CBO report can be found here. This (hard to read) chart is from that report.
I was born in the 60s, and so I am 20+ years away from collecting SS benefits. So obviously this analysis assumes that SS will be around for that long, at least. Therefore, I can only assume that the CBO's methodology employed a drawing down of the trust fund, as if the trust fund were a great big checking account with cash money in it. Of course, that is NOT the case. The trust fund is a pile of bonds, which must be redeemed. Where will the treasury get the money to pay for these redemptions? SS has always been pay as you go, and the benefits paid this year were taxed away from other people THIS YEAR. SS will cash flow negative any year now, so things will come to a head sooner, not in decades. I am NOT planning on having any SS benefits, and neither should you.
ReplyDeleteRegardless, the chances of someone even in their 50's today collecting even 50% of what they paid in is doubtful considering that at some point those born in the 80's will be in positions of power to alter or end the SS scam. Go listen to Gary Norths SS presentation and you'll see the real facts and scenarios that the CBO dare not put forth lest we have France like protests here.
ReplyDeleteMy Venezuelan mother-in-law continued to work into her late 70's. Her lifetime earnings placed her at the top of their version of Social Security. That amount, which they stopped adjusting for inflation some decades ago, buys a few bags of groceries a month. And she's at the maximum range-- imagine those on the lower rungs? The same-- and worse-- will happen to SS in the United States.
ReplyDeleteGlad I was born in the 40's
ReplyDeletewonder how it will work out for those who become disabled in the workplace, wonder if they will still get some type of support
ReplyDeleteAs a matter of fact, they do. It's called Social Security Disability Insurance (SSDI). While the criteria for receiving it is extremely dificult, thoe tat receive them do so at a rate usually far above regular Social Security retirement benefits.
ReplyDeleteRemember, your Social Security benefits are your contributions to the program, so the next time somebody regurgitates the government's new catch phrase (entitlement) remember that these are our benefits, we paid for them just like any other insurance policy (at a much higher rate) and we expect our money back in the form of retirement or disability as provided for by law.
Robert S. Finnegan
SoutheastAsia Independent Media
rsfinnegan@gmail.com
Jakarta, Indonesia
Alas untrue for those of us born in the 1940's as the benefits have already been cut via no cola's. and rising health care premiums, fuel and food costs. We elders are already being strangled, slowly.
ReplyDeleteI was born in 1967 and have been going on the assumption that I will probabaly not collect SS at all or an amount far less than what I paid in.
ReplyDeleteThis report doesn't surprise me at all. I think my generation will be stuck with resolving this issue since Boomer politicians don't want to touch it.