
Why pessimism on Social Security could come back to bite millennials - SolaceQuantum
https://www.reuters.com/article/us-column-miller-socialsecurity/why-pessimism-on-social-security-could-come-back-to-bite-millennials-idUSKCN1ST12R
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nostrademons
When it comes to funding retirement on a societal level, the only two numbers
that matter are dependency ratios (the number of working people per non-
working person) and productivity (the amount of useful work able to be done by
one laborer). If either of those falls, living standards necessarily have to
fall - you have fewer people doing the work of supporting everyone,
potentially less efficiently. If you can get productivity to go up faster than
the dependency ratio is falling, you have a chance of offsetting the fall.

Every government policy or financial product is just redistributing the pain
of falling living standards. You can dictate that retirees receive transfer
payments from working people, as per social security - but it means that they
have less money to spend on themselves and their kids. You can transfer
earnings within a corporation from current workers and shareholders to
retirees, as per pensions - but it means the company will be a less attractive
place for new hires, and risks the financial solvency of the whole company.
401(k)s have their own problems - the price of stocks, at any given instance,
is set by the ratio of dollars entering the market to dollars leaving the
market, so if all retirees try to pull their money out to fund retirement at
once, they'll find the stock prices they were counting on crash.

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darkmarmot
Well, when the global food chain collapses with the environment, I think
'working people' will be overshadowed by 'starving' people.

~~~
nostrademons
Depends if political stability can be maintained. The Earth produces enough
food _now_ to feed about 10B people, a roughly 50% increase over total world
population. We still have famine because of distribution problems: the food
doesn't get to people who need it, and instead gets hoarded by those with
power.

Global warming isn't likely to cut _total_ arable land or food production (if
anything, it'll likely increase it), but it definitely changes the
_distribution_ of arable land. Current breadbaskets like Southern Europe,
South Asia, and Brazil might see frequent droughts; currently desolate areas
like the Sahara or Canadian Shield may become fertile again. If countries can
work out trade deals so that food gets to where it needs to, things can work
out. If they start closing borders and saying "fuck you I got mine", there
will be widespread starvation and war in many regions.

~~~
jolfdb
Food isn't hoarded, it's wasted, because no one pays for deliver it where it's
needed.

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ziddoap
I like how the author says: >Politicians routinely claim that Social Security
is going bankrupt and that its shortfalls drive the national deficit - neither
is true.

Followed by: >Yes, there is a funding problem: absent other changes, the
combined retirement and disability trust funds will be empty in 2035.

Which,to me, seems pretty contradictory. The author continues to say there is
no problem at all, as long as a specific Act passes unmodified. So -
everything is okay, but only as long as X Y and Z happen...

Seems like this is just a really roundabout way of being able to cram
"millenials" into another story. They're killing the SS industry with their
pessimism!

~~~
javagram
The article does continue to say “At that point, current revenue would be
sufficient to pay about 80 percent of schedule benefits.”

SS isn’t going away. At worst the benefits will be slashed to some fraction of
what the law requires.

Considering the rising cost of living we should all save for retirement using
a pension plan or 401k anyway though. Agreed that the framing of blaming
millennials makes no sense here.

~~~
DuskStar
The author also says that planning to receive 50% of your stated social
security benefits is crazy, and then mentions that absent any legal changes
there'll be a 20% cut in 15 years. Am I supposed to believe that that cut
won't go up with time?

~~~
javagram
The Social Security Trustees report state that they can use revenue under
current law to pay for 75% of scheduled benefits through 2093.

Unless there is a dramatic economic collapse due to climate change or global
thermonuclear war or whatever, you should be able to plan on receiving more
than 50% of your benefits. Of course in case of collapse like that my 401k
probably doesn’t keep its value either...

[https://www.ssa.gov/oact/TRSUM/](https://www.ssa.gov/oact/TRSUM/)

~~~
DuskStar
It would be wonderful if that 75% number pans out! But at the same time, I'm
still going to do my retirement planning assuming that Social Security dies
before I'm able to withdraw a single dollar.

Pessimistic assumptions are a good idea in situations like this.

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joelx
My opinion is that the baby boomers are going to go down in history as the
generation that broke America. They took far more benefits than they paid for
and ran up the national debt, bankrupting the country.

~~~
weberc2
FWIW, I'm worried that we (millenials) will do the same with Republicans who
are only nominally concerned about the budget and Democrats who aren't even
_nominally_ concerned (#CancelMyDebt #GreenNewDeal etc).

~~~
mikeash
Democrats generally want to raise taxes to match spending. Democrats are “tax
and spend,” Republicans are just “spend.”

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stouset
I’ve said this a million times. I have no idea how the Republicans have
managed to brand themselves as the fiscally-responsible party.

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snarf21
If anyone thinks _ANY_ political party can have _all_ the answers, they aren't
using their brain. In addition, our structure today is about keeping the
fights as an us vs them, while the corporations steal our lunch while we are
distracted. It reminds me of a quote from the movie "The Usual Suspects", _'
The greatest trick the Devil ever pulled was convincing the world he didn't
exist.'_

~~~
stouset
I'm not sure how anything I said can even remotely be construed as implying
that any political party can have all the answers, seeing as it was little
more than a criticism of one policy area of one political party.

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srcno
I don't understand why Congress doesn't incrementally, predictably, and slowly
raise the retirement age for Social Security. It was never intended as a
retirement program - instead it an insurance for those those that lived beyond
the average life expectancy.

I don't think it's unreasable to expect people to save enough to cover then
between their age of retirement to say 70 or 75. Then let the insurance kick
in after that.

~~~
naravara
>I don't understand why Congress doesn't incrementally, predictably, and
slowly raise the retirement age for Social Security. It was never intended as
a retirement program - instead it an insurance for those those that lived
beyond the average life expectancy.

This is absolutely untrue. Here is FDR's address as he signed Social Security
into law:
[https://www.ssa.gov/history/fdrstmts.html#signing](https://www.ssa.gov/history/fdrstmts.html#signing)

This doesn't sound at all like it's not meant to be a retirement program. He
even explicitly uses the word 'pension.'

"Young people have come to wonder what would be their lot when they came to
old age. The man with a job has wondered how long the job would last.

This social security measure gives at least some protection to thirty millions
of our citizens who will reap direct benefits through unemployment
compensation, through old-age pensions and through increased services for the
protection of children and the prevention of ill health.

We can never insure one hundred percent of the population against one hundred
percent of the hazards and vicissitudes of life, but we have tried to frame a
law which will give some measure of protection to the average citizen and to
his family against the loss of a job and against poverty-ridden old age."

~~~
Terr_
Well, it was always _literally_ an insurance program -- the "I" in OASDI.

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sunshinelackof
The weakest part of social security is that it's thought of as a pension and
not as a service that government provides to the elderly and disabled. If
government wished, it could be funded fully, regardless of whether it's
"solvent."

It's not question of financial viability as much as it is a question of how
much value we, or The US, puts on the lives of the elderly. Or otherwise
framed as: How little we can spend on the elderly without the reemergence of
poorhouses.

There are obvious concerns about having a healthy and productive tax base, but
that will always be the case. Implicating the tax base for the existence of a
government service is just politics.

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zelon88
I am in no way a social security expert, but I'm concerned that this article
missed several key points that feed the pessimism. I rarely see them addressed
elsewhere, either.

Here are my concerns, and why I don't have faith in Social Security..... 1)
Retirement age is going up. I probably won't be eligible until I'm 80. 2) Life
expectancy is going up. Grampa will probably exhaust his SS before he passes
away. 3) More and more doctors are putting too many underage work-eligible
people on disability/SS just because they can't find work/aren't productive
employees. This breaks the work/eat feedback loop that everyone else relies
on. 4) My current contribution level won't mean shit in 50 years after
infaltion.

When older generations complain I usually use the joke "Yeah well at least
you're gonna be able to collect social security. I'm never going to retire."
It's a lighthearted joke but I am 100% convinced that it's going to become
reality.

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smileysteve
Mainstream financial planner advice has been pessimistic about Social Security
for > 10 years. Of course, the incentive is easy, any financial planner
benefits more if you invest more.

Major changes that drastically affect Social Security

\- Changing the Retirement Age, even adding a 3rd progression delay (for
people who will keep working or have some savings) and pegging this to U.S.
life expectancy.

\- Changing the survivors benefits payouts and required minimum distributions
(arguably, if the middle and lower class has more 2 family incomes, these make
less sense.)

\- (Biggest) Changes to healthcare. A large portion of Social Security right
now goes right back into the hands of long term nursing homes. In addition,
you have medical expenses related to "retirement living communities"; I'm not
very sure that as boomers age even more into nursing homes, that those well
prepared will be able to find supply.

I also look forward to the eventual reform of Social Security to allow more
diverse investment methods. Whichever President is in office when age based
asset diversification is added to SS will see a huge market boom!

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thrower123
I'm planning that Social Security will either not exist or be so paltry as to
be useless, and doing my retirement planning accordingly. It certainly
wouldn't hurt my feelings any to be proved wrong, but I'm not depending on
ever seeing a single red cent out of it.

~~~
jhayward
That all good and well for you. However, if you extend that attitude to say
"and I'm not going to allow congress to properly fund social security as a
result", then you are the problem.

~~~
jriot
I vote to not pay into social security, let me manage my own money.

~~~
vostok
You can always vote with your feet if you feel like opportunities in the US
don't justify the level of taxation.

