Social Security's catch-22 is bad news for retirees

The Motley Fool ^ | March 7, 2020 | Sean Williams

[where's_the_Outrage?]

As you may have heard, our nation's most successful social program is in a bit of a bind.

Every year since 1982, the Social Security program has generated a net cash surplus. By bringing in more revenue than is paid out in benefits each year, the program has been able to build up a $2.9 trillion reserve. However, according to the 2019 report from the Social Security Board of Trustees, the program is about to hit an unwanted inflection point.

You see, more than a half-dozen ongoing demographic changes are expected to result in Social Security expending more than it collects in 2020. While this initial net cash outflow will be relatively small, the amount flowing out of the program will increase exponentially in subsequent years. By 2035, Social Security's asset reserves of $2.9 trillion are forecast to be completely exhausted.....

The problem is that Social Security finds itself in a Catch-22. The "Catch-22" phrase describes a dilemma that offers no escape because of mutually conflicting or dependent conditions. In Social Security's case, no matter what unilateral proposal is made to resolve the program's cash shortfall over the long term (defined as the next 75 years), benefit cuts for retired workers seem to be a given.

[Pearls Before Swine]

SS has always been a Ponzi scheme in the sense that workers (new entrants into the scheme) paid the older ones. But initially, and for perhaps 30 years, the workers’ specific SS payroll payments more than covered the retiree’s costs, and the surplus was actually invested in something. So the specific SS surplus was actually a surplus.

Now, the funds are commingled. The worker’s payroll “contributions” go into the government’s general funds, and the retirees are paid from general funds, plus or minus an entry into the IOU account otherwise known as the Trust Fund.

A slight difference. But yes, always a Ponzi scheme. Just now, this scheme is mixed up with a bunch of other schemes... er, I mean programs.

[null and void]

Those of us who happen to be survivors in these top cohorts:

Will thank the rest of you for freeing up funds...

Bring Out Your Dead

Post to me or FReep mail to be on/off the Bring Out Your Dead ping list.

The purpose of the “Bring Out Your Dead” ping list (formerly the “Ebola” ping list) is very early warning of emerging pandemics, as such it has a high false positive rate.

So far the false positive rate is 100%.

At some point we may well have a high mortality pandemic, and likely as not the “Bring Out Your Dead” threads will miss the beginning entirely.

*sigh* Such is life, and death...

If a quarantine saves just one child's life, it's worth it.

[Captain Compassion]

Corona Virus, that hits the elderly the hardest, may solve the Social Security problem. I’m just saying.

[billyboy15]

No, the payments wouldn’t escalate to match the increased payments What happens is the maximum pmt would rise from say $3000 per month to around $3500 or $3750 while the contributions would rise at a rate much higher.

[bkopto]

“You worked hard your whole life and paid thousands of dollars in Social Security taxes. Now it’s time to retire. You’re legally entitled to Social Security benefits, right? Wrong. There is no legal right to Social Security, and that is one of the considerations that may decide the coming debate over Social Security reform.

“Many people believe that Social Security is an “earned right.” That is, they think that because they have paid Social Security taxes, they are entitled to receive Social Security benefits. The government encourages that belief by referring to Social Security taxes as “contributions,” as in the Federal Insurance Contribution Act.

“However, in the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.”

https://www.cato.org/publications/commentary/is-there-right-social-security

[Macoozie]

“There is a third alternative - PRIVATIZE SOCIAL SECURITY.
Absolutely the best solution. “

Bad idea.

SS was never intended to be a pot of money to live on. It was old-age insurance. Enough so you wouldn’t publicly starve to death.
You lived on a farm with your family.
You rarely went to a Hospital.
“Medicine” came in a bottle and was 80 proof, or grew in the “notions” garden of the local Healer.
Besides, you would probably DIE before reaching 65 to collect a penny of it, as life expectancy was 61 when SS started.
Your local Doctor treated you for a few chickens or new horseshoes.

But Old Folks today demand Their Money! They Paid In!

Over 50? Guess what? You were fooled. They took your money and spent it. There isn’t anything there. If you have nothing saved, your screwelled. Better to have a Novel Corona and call it a day. Suck it up Buttercup.

Under 50? Better have land to retire on, with proper food production, water and energy capabilities. And maybe a few kids to help out on your way out of this earthly realm. Didn’t have any kids? Too busy working? Your screwelled too, unless you’re already senile enough to think those 3rd worlders working in the Medicaid Nursing Home really give a shiite about you.

Under 30? you got time to figure out your own path, with some older folks in front of you to learn from.
Teach Your Kids. That’s why you are still here.

[desertfreedom765]

Another reason to start collecting your Social Security at 62 instead of 67 or 70. It might not be there so why wait?

[Uncle Miltie]

WuFlu: Demographically serendipitous.

[Macoozie]

“The only way you can draw anything from social security is if you, your spouse, or your parent paid in.”

Sorry, that’s not true.

SSDI goes to old parents, disabled kids and other moochers attached to folks once they are citizens and bring the rest of the Gaggle over the border.

[Capt. Tom]

““the program has been able to build up a $2.9 trillion reserve”

Anyone who believes that is a fool. Those are US Treasuries, government IOUs.

You mean the $2.9 TRLLION isn't in the Social Security Lock Box?? /S -Tom

[Sparticus]

There is no social security surplus. The surplus was only ever on paper. The baby boomers spent it all as fast as it came in. The “lock box” it’s full if IOUs.

[stuckincali]

means test?

[SunkenCiv]

It's a good idea to plan for retirement beginning at age 18 (iow, after graduation from high school) and an IRA/Roth IRA/401K is basic to that planning. Forty/45 years goes/went pretty quickly.

[Brilliant]

They’ve been running an operating deficit since 2010. Not sure why this article says it’s new.

[null and void]

Any politician proposing to enforce that needs to keep in mind that life in prison isn’t anywhere near as scary to an 80 year old as it is to a 20 year old.

And that many people who show up for jury duty are elderly...

[pas]

Covid 19 to the rescue.

[CurlyDave]

...I still wonder though when push comes to shove how many Freeprs will sell their freedom to keep their SS...

I don't want to sell my freedom to keep my SS, but money was taken from me (under penalty of law, if not at gunpoint) and in return I was promised a benefit.

I want the benefit I was promised. There are other ways for the government to pay that benefit instead of raising taxes. The federal government owns vast tracts of land in the western states. Much of it is considered "worthless", but I bet if the RIGHT to develop it were included in a sale it would be worth plenty.

Instead of constantly fighting illegal immigration, we could just sell the right to enter the US and work. The people who came in would work hard to pay for the right they bought and would turn in illegals in a heartbeat to protect their own investment.

Plenty of ways for the US to raise money without raising taxes...

[hanamizu]

“...there is no downside for the Dems to cut benefits saying the “double dipper” getting both military retirement and SS is unfair and hurting the poor.”

---

I’m a “double dipper” according to Social Security. I retired from teaching in a state that didn’t include Social Security, since we had a state-backed pension. But I worked for many years before teaching and did pay into SS. Because I collect a state pension, my earned SS benefit is docked by 60%. My monthly SS check is about $225 but I only get half of that because of the Medicare part B deduction.

I do take comfort in the fact that people like Bill & Hillary Clinton and Barrack Obama are able to draw pensions from their state service as well as federal service, but that’s not “double dipping”. I expect they get a Social Security benefit as well.

[FreedomPoster]

It worked a lot better back when the retirement age was greater than the average age at death.

[FreedomNotSafety]

All levels of government have promised far more benefits than can ever be paid for. We all want something that was promised to us but I do not see how we can make political promises inviolable. If every politician can bind future generations by making a promise then we need to renew the advice of Jefferson.