Fix Social Security Now

[JoeTheEconomist]

The trustees of the Social Security Trust Funds released their report on July 28. The details of the report clearly show that the crisis in Social Security is not only deepening but widening as well.

The conventional measure of the report is the exhaustion point of the trust fund, which continues to be 2033. That is the point at which financial consequences start falling on retirees. That date didn't change, but every other measure of the crisis has changed for the worse.

The reasonable solvency of the system was reduced over the course of 2013 from 19 years to 18 years. This reduction means that for the first time in history on average someone retiring today at normal retirement age expects to outlive full benefits. Anyone who is 48 years old or younger roughly expects to retire after the system pays depleted benefits. This, believe it or not, is the good news.
The bad news is that the size of the crisis arriving in 2033 is growing rapidly. The report reveals that the unfunded liabilities now exceed the Gross Domestic Product of the entire county. The financing shortfall grew by $1.8 trillion. The growth means that Social Security created more than $2 of broken promises for every dollar that it collected ($855 Billion in 2013). The grand total of unfunded liabilities exceeds all revenue ever collected by the system since its inception.

The other measure of the shortfall, the 75 year financing gap, tells us how much it will cost to kick the can. This cost rose $1 trillion dollars, again more than the system collected in all forms of revenue. To solve this part of the problem we would have to raise payroll taxes from 15.3 percent to 18.18 percent (an increase of 2.88 percent). In other words, the nation would need to divert roughly $10.6 trillion away from deficit reduction in order to make the Boomer’s problem an even larger problem for their children.

The report tells us that these broken promises will start falling on people in roughly 19 years. The Trustees project that there is a 50 percent chance that the system will pay full benefits through 2032. It is reasonable today to expect that more than 50 percent of voting aged Americans will retire after 2032. Five years ago, a near majority of voting aged Americans expected to be completely unaffected by the shortfall. Today, it is less than 20 percent.

Politicians assure us that we have time to fix the crisis. It is ironic that Time is the one variable that we know with certainty is destructive to Social Security. The 2014 report tells us that changing the valuation date from 2012 to 2013 meant that the system created $900 billion broken promises. Another way to look at this problem is if we had diverted every penny spent on the military in 2013 to Social Security, the system would still have been worse off at the end of the year than it was at the beginning.

What should trouble people is that the Congressional Budget Office (“CBO”) provides similar projections on the Social Security system. Every angle of CBO’s projections provides a more pessimistic forecast for Social Security. CBO believes the crisis emerging in Social Security will be larger and arrive sooner than the Trustees. They show that it will affect more people and require greater resources to ameliorate. So it is possible that the Trustees are too optimistic.

The problem with this coverage today is that it focuses on the length of the fuse rather than the size of the bomb.

Originally Published on TheHill.Com

 

[Visbek]

I'm gonna regret this, but....

What is your proposal to fix SS?

 

[JoeTheEconomist]

I'm gonna regret this, but....

What is your proposal to fix SS?

Today the debate isn't about how to fix Social Security. It is how to pay for its brokenness.

Instead of focusing on how to throw money at the problem, we ought to be looking at the reasons that it is broke. It is BS that we are living longer. It is likely BS that we have too few workers per retiree. That question doesn't fit into 10 words or less.

What I will tell you is that it is a mistake to exempt any group from the consequences of solution. The idea that our children will get less from Social Security than we take from it ourselves is a highway to the systems' destruction.

 

[Visbek]

With all due respect...

Stop dissembling. Either you have a concrete plan to address the issues, or you don't. Which is it?

Feel free to use more than 10 words to reply.

 

[JoeTheEconomist]

I have been down this road before, and there is a small fraction of people who ask possess the interest much less the willingness to read any plan.

So will all due respect, you are free to go to our site, download an example of a plan. It is a 20 page document that looks at the inefficiencies of Social Security, and how to address one of them. We identify 4 structural inefficiencies, and I am sure that there are more. Mind you we ignore the problem of rule inefficiency. For example, we have a option at the moment which allows married people to retire early on spousal benefits, and subsequently claim benefits on their own record at full-retirement age. This costs the system 10 billion per year. This rewards generally affluent people who know how to game the system. Is that really what you want Social Security to do?

The point of the plan is that it is possible to fix Social Security without tax increases and benefit cuts. I don't care what direction reform goes. I just want people to have an honest discussion about it before it implodes.

Understand, that I think Social Security should be old-age insurance. It isn't a welfare program, and I see no point in turning it into one. People who want to remove the cap, actually hate the concept of Social Securitym, which rewards past contribution. They want to end it, and replace it with a welfare program. That isn't a solution, it is ending the program.

 

[Visbek]

I have been down this road before, and there is a small fraction of people who ask possess the interest much less the willingness to read any plan.

I directly expressed an interest, twice. You didn't make it easy to find your plan. And after reading, it's not that complex. Your shyness is unjustified.

Your "draft copy" spends 9 pages criticizing the system, and another 5 pages on appendices. Let's see what the rest is, hmm?

• Invest individual collections into mutual funds managed by private-sector brokerages, which are converted to annuities at retirement. How you imagine this "lowers the risk" is beyond me, as Treasuries are literally as safe as it gets in this world. Presumably, this also transforms SS from a "pay-as-you-go" system to what is basically a government-managed IRA. (This is typically referred to as a "carve-out" option.)

• Apparently, some type of "trickle down" theory, in which reducing the payroll tax rate will magically increase revenues. Oddly enough, it didn't seem to work that way during the Obama stimulus.

And... that's it.

Diversifying the fund is already on lots of people's radars. Optimistic forecasts suggest this will close the shortfall by a whopping.... 20%? Maybe 25%. Obviously that buys us a few years, but will not close the gap, not by a long shot. (I also don't see a single shred of evidence in the paper which proves it would work otherwise.)

As to giving individuals more choice, that way lies losses. The average investor can't even outperform a 3-year T-bill, let alone inflation: Typical Investor Returns, 20 Years - Business Insider

And of course, the rate of return on the Trust Fund is actually better than the average investor's 20 yr return:

And of course, there is the wholly unexplained issue of how you plan to enact these changes fast enough to avoid the 2033 deadline. In fact, allowing people to divert their payroll taxes into individual accounts will almost certainly hasten the demise of SS, because the system is still pay-as-you-go -- and carving out funds means less funds going to pay for current beneficiaries.


So, yeah. Your propositions are not really innovative, radical, inexplicable, unexamined or... anywhere near sufficient.

Then, there are the "New Ideas" on your website. They aren't actually all that new, but who's asking?

• Increase the number of years required to qualify (which can only save money if it cuts benefits)
• End / reduce spousal benefits (obviously, a benefit cut, and a big one)
• End / reduce survivor benefits (another benefit cut)
• End /reduce divorce benefits (yet another benefit cut)
• Slash or end an increase in benefits for disabled individuals who have children (son of yet more benefit cuts)
• Means-testing early retirement (daughter of yet more benefit cuts, and one that ignores how early retirement is already disadvantageous, and reduces one's lifetime benefits)
• No changes to payroll taxes, with an implication of eliminating them
• Claw back payments from estates (basically, a big fat tax on the wealthy, and one that could wipe out middle-class estates, but hey at least it will raise revenues; it would also encourage the families of people who die early to demand the rest of the money they put into SS because fair's fair, right?)
• Lump sum payments (why you think this will work, no idea)

These aren't in your paper, but it does seem like you recommend them. The irony, of course, is that these types of changes will make a substantial dent in the shortfall by, wait for it... CUTTING BENEFITS AND RAISING REVENUES. Exactly the thing you claim is off the table.

 

[Bob Blaylock]

You can't fix it.

It is unavoidable that eventually, the Socialist inSecurity scam will collapse the way that all Ponzi schemes eventually do; and when it does, many people will be seriously screed over. There is nothing that can be done to prevent anyone from being screwed over that doesn't result in different people instead being screwed over to the same collective degree.

 

[Fiddytree]

Slash or end an increase in benefits for disabled individuals who have children (son of yet more benefit cuts)

This does not promote behavior that is desired by American traditionalists, you know. SSDI is not exactly easy to get, it's fairly regularly managed, and it's frequently one of the only means that they have of establishing a semblance of independence (although it likewise encourages spending for the sake of spending, because they can't have a build-up of savings, yet can't work enough hours lest they sacrifice the only services they can get in order to live more independently).

 

[JoeTheEconomist]

I directly expressed an interest, twice. You didn't make it easy to find your plan. And after reading, it's not that complex. Your shyness is unjustified.

Your "draft copy" spends 9 pages criticizing the system, and another 5 pages on appendices. Let's see what the rest is, hmm?

• Invest individual collections into mutual funds managed by private-sector brokerages, which are converted to annuities at retirement. How you imagine this "lowers the risk" is beyond me, as Treasuries are literally as safe as it gets in this world. Presumably, this also transforms SS from a "pay-as-you-go" system to what is basically a government-managed IRA. (This is typically referred to as a "carve-out" option.)

• Apparently, some type of "trickle down" theory, in which reducing the payroll tax rate will magically increase revenues. Oddly enough, it didn't seem to work that way during the Obama stimulus.

And... that's it.

Diversifying the fund is already on lots of people's radars. Optimistic forecasts suggest this will close the shortfall by a whopping.... 20%? Maybe 25%. Obviously that buys us a few years, but will not close the gap, not by a long shot. (I also don't see a single shred of evidence in the paper which proves it would work otherwise.)

As to giving individuals more choice, that way lies losses. The average investor can't even outperform a 3-year T-bill, let alone inflation: Typical Investor Returns, 20 Years - Business Insider

And of course, the rate of return on the Trust Fund is actually better than the average investor's 20 yr return:

d
And of course, there is the wholly unexplained issue of how you plan to enact these changes fast enough to avoid the 2033 deadline. In fact, allowing people to divert their payroll taxes into individual accounts will almost certainly hasten the demise of SS, because the system is still pay-as-you-go -- and carving out funds means less funds going to pay for current beneficiaries.


So, yeah. Your propositions are not really innovative, radical, inexplicable, unexamined or... anywhere near sufficient.

First, let me thank you for your time. Few are willing to put 10 seconds into the issue.

Separately, what you have written suggests that you have misread the piece - completely.

"Invest individual collections into mutual funds managed by private-sector brokerages, which are converted to annuities at retirement. How you imagine this "lowers the risk" is beyond me, as Treasuries are literally as safe as it gets in this world. Presumably, this also transforms SS from a "pay-as-you-go" system to what is basically a government-managed IRA. (This is typically referred to as a "carve-out" option.)"

That is a Ryan-type plan where individual contributions LEAVE the system, where the contributions belong to an individual. This plan separates the beneficial interest from the principal interest, where Social Security charges a fee for the privilege. Social Security always owns the principal. Yes, the principal is managed by the individual. It is something like getting investment management from an investment manager that pays you for the right to help. This is a theoretical example. It is like allowing the Trust Fund to invest in the stock market where the Trust Fund gets all of the upside and shares the downside risk with the manager. It isn't a good idea for everyone. No it is not fair. It is a solution which leverages the only two natural resources that are completely boundless - greed and fear.

I happen to make a living managing risk. When you say that Treasuries are the safest investment in the world, you are looking at first dollar risk, not last dollar risk. When you have asset concentrations - as you do in Social Security's Trust Fund - you magnify risk because the first dollar you sell affects the last dollar you get. We can argue about at what level does the asset concentration become dangerous. Just my opinion, at 2.7 trillion, you are at a level where your last dollar risk is fairly high. You are replacing last dollar risk in Treasuries with first dollar risk in the market because the amounts that we are dealing with is relatively small.

I am sorry that you feel mislead by 'New Ideas'. Tell me a better name. We are giving people ideas that people are/have looked at in the past.

 

[JoeTheEconomist]

You can't fix it.

It is unavoidable that eventually, the Socialist inSecurity scam will collapse the way that all Ponzi schemes eventually do; and when it does, many people will be seriously screed over. There is nothing that can be done to prevent anyone from being screwed over that doesn't result in different people instead being screwed over to the same collective degree.

You may have a point, and it is one that I hear regularly. What I respond with is simple : yes it may collapse at some point. That doesn't mean that it the pain will be the same. The longer we do nothing - and we are doing a marvelous job of nothing - the larger the collapse will be. The level of screwed is growing rapidly. Now what are you doing about it?

 

[JoeTheEconomist]

Then, there are the "New Ideas" on your website. They aren't actually all that new, but who's asking?

• Increase the number of years required to qualify (which can only save money if it cuts benefits)
• End / reduce spousal benefits (obviously, a benefit cut, and a big one)
• End / reduce survivor benefits (another benefit cut)
• End /reduce divorce benefits (yet another benefit cut)
• Slash or end an increase in benefits for disabled individuals who have children (son of yet more benefit cuts)
• Means-testing early retirement (daughter of yet more benefit cuts, and one that ignores how early retirement is already disadvantageous, and reduces one's lifetime benefits)
• No changes to payroll taxes, with an implication of eliminating them
• Claw back payments from estates (basically, a big fat tax on the wealthy, and one that could wipe out middle-class estates, but hey at least it will raise revenues; it would also encourage the families of people who die early to demand the rest of the money they put into SS because fair's fair, right?)
• Lump sum payments (why you think this will work, no idea)

These aren't in your paper, but it does seem like you recommend them. The irony, of course, is that these types of changes will make a substantial dent in the shortfall by, wait for it... CUTTING BENEFITS AND RAISING REVENUES. Exactly the thing you claim is off the table.

We don't recommend anything. Our goal is only to tell people what is out there. The purpose of the paper is simply to demonstrate that it is foolish to buy into the conventional false dichotomy that the only solution to Social Security's imbalances is benefit cuts and tax increases.

I do believe that ending early retirement is necessary. Understand my belief is that Social Security is old-age insurance. It is not my-job-sucks-insurance. It provides an option for older Americans to trade long-term risk for short-term gain. That is completely inconsistent with the goals of the program.

"Means-testing early retirement (daughter of yet more benefit cuts, and one that ignores how early retirement is already disadvantageous, and reduces one's lifetime benefits)"

I thought it was means-testing survivor benefits. But I have bad news for you. SSA says that Early Retirement DOES NOT affect your benefit level at all. Whether you retire at 62 or 70, your benefit level is roughly the same over an average life expectancy. My guess is that does not factor in spousal or survivor benefits (but it is just a guess).

"Claw back payments from estates (basically, a big fat tax on the wealthy, and one that could wipe out middle-class estates, but hey at least it will raise revenues; it would also encourage the families of people who die early to demand the rest of the money they put into SS because fair's fair, right?)"

Understand that few retirees today have paid for the benefits that they expect to collect. It is not a tax on the wealthy. This one would apply to most Americans, and would recoup the over payment. We aren't dealing with a 50% tax. This solution deals with the exact root of Social Security's imbalances. Voters voting for personal benefit at the expense of future voters. Today's 80 year-old was around to vote for the people who expanded SS, who cut the taxes to support it, who handed-out perks like in 1972. This approach puts the penalty on those who voted for the mess. To me that is a much better solution than kicking the hell out of the average worker today who had no vote in the mess.

 

[JoeTheEconomist]

• Lump sum payments (why you think this will work, no idea)

These aren't in your paper, but it does seem like you recommend them. The irony, of course, is that these types of changes will make a substantial dent in the shortfall by, wait for it... CUTTING BENEFITS AND RAISING REVENUES. Exactly the thing you claim is off the table.

Not sure where the lump sum idea came from. The only time that I have seen it was from a writer for Barons. In my view it is at least different. I have traded emails with the author, and informed him that his math uses the wrong shortfall. He was rather surprised to find that there are multiple versions of the shortfall. Instead of paying out $0.83 on the dollar, Social Security would pay-out pennies on the dollar.

 

[JoeTheEconomist]

I • Increase the number of years required to qualify (which can only save money if it cuts benefits)
• End / reduce spousal benefits (obviously, a benefit cut, and a big one)
• End / reduce survivor benefits (another benefit cut)
• End /reduce divorce benefits (yet another benefit cut)

Let's be clear. These benefits are something that no one pays for. The cost to get the benefits is the same whether you are married or not, whether you have kids or not. These things are garden variety welfare, except... That we pay more to people because they earn more.

We do suggest 'ending or reducing' divorce benefits. We suggest that contributions over the course of the marriage should be divided as part of the divorce settlement. Instead of dividing assets in court, the taxpayer is expected to contribute the dissolution of the marriage. Sorry, I do think that practice should be ended.

 

[Visbek]

That is a Ryan-type plan where individual contributions LEAVE the system, where the contributions belong to an individual....

OK, I'm assuming you do not want a carve-out, which means SS will continue as a pay-as-you-go system.

But if that's the case, then why should the individual have a choice about how the money is invested? Joe Citizen will not draw on his own investment, so why should he choose? We know the average investor does a terrible job, is not educated in how to manage investments, and is not a professional investor (who also don't do so great...). Why would we want to turn over management of the SS Trust Fund to millions of individuals, with no investment training, who aren't professionals, and who we know have a terrible track record?

It is like allowing the Trust Fund to invest in the stock market where the Trust Fund gets all of the upside and shares the downside risk with the manager.

And why would any manager, in their right mind, take that deal? The only way I can imagine it is if they get paid a fixed income, which will obviously reduce the returns.

As someone who manages risk, surely you understand that increasing returns also increases risks, and no one is going to take the fall for just the risk portion. There's no free lunch.

When you say that Treasuries are the safest investment in the world, you are looking at first dollar risk, not last dollar risk.

No, I'm looking at both. The Trust Fund is invested in securities that on average, mature in 7 years, and max out at 15 years. Are you genuinely suggesting that the federal government is likely to default on those securities? (If so, then I'd say that a you should be freaking out about a lot more than just Social Security.)

I'm also looking at the actual behavior of the markets, as well as inflation-adjusted returns. E.g.:

(And of course, many stock pickers are convinced the market is about to crash... stay tuned)

Equities will have higher returns, but also higher risks. So for example, during a recession you may have people collecting SS early, because they're 62, unemployed, and see no real job prospects. These individuals would start drawing on a system when it's value is down. That's not good for the long-term health of the trust fund.

We know for a fact that equities have gone on a roller coaster since the 1990s, and the ROI will depend on when funds are invested. If we adjust for inflation and assume dividends are reinvested, your returns vary greatly based on the time periods you're comparing. E.g.:

March 2009 (market trough) to now = 19.493% return
March 2000 (peak) to March 2009 = -7.524% return
January 1999 to present = 2.369%
January 2000 to present = 4.011%

These returns are also buy-and-hold. Active investing, and trying to time the market, will almost certainly reduce returns.

Most critically, it is unjustifiable to claim that diversifying the Trust Fund will fix the issues. Again, it's unlikely to do much more than close the gap by 20-25%, let alone push back the "Day of Doom" from 2033 to 2089, let alone permanently adjust the issues.

I am sorry that you feel mislead by 'New Ideas'. Tell me a better name. We are giving people ideas that people are/have looked at in the past.

I wouldn't use the term "misled," I'm more confused by the way it is presented. What I cannot tell is:

• Are you actively advocating some or all of those plans?
• Do you, or do you not, recognize that those "New Ideas" are just other ways of cutting benefits and increasing revenues, which you claim is off the table?

 

[Visbek]

Let's be clear. These benefits are something that no one pays for....

If you increase the number of years to qualify, and this reduces outlays, then it's cutting benefits.

If you end or reduce spousal benefits, survivor benefits and divorce benefits, and this reduces outlays, then it's cutting benefits.

As far as being "unpaid" benefits, you of all people should realize that terminology doesn't apply to a pay-as-you-go system. Recipients don't actually get out of it what they pay into it. The social contract, if you like, is much looser. SS is also not an investment system, it's a safety net.

So when you advocate these cuts, you are cutting benefits.

 

[Vern]

You may have a point, and it is one that I hear regularly. What I respond with is simple : yes it may collapse at some point. That doesn't mean that it the pain will be the same. The longer we do nothing - and we are doing a marvelous job of nothing - the larger the collapse will be. The level of screwed is growing rapidly. Now what are you doing about it?

er uh Joe, what do you think happens in 2033 when SS "collapses"?

 

[Spartacus FPV]

I'm gonna regret this, but....

What is your proposal to fix SS?

Let me and my generation opt out.

 

[JoeTheEconomist]

OK, I'm assuming you do not want a carve-out, which means SS will continue as a pay-as-you-go system.

But if that's the case, then why should the individual have a choice about how the money is invested? Joe Citizen will not draw on his own investment, so why should he choose? We know the average investor does a terrible job, is not educated in how to manage investments, and is not a professional investor (who also don't do so great...). Why would we want to turn over management of the SS Trust Fund to millions of individuals, with no investment training, who aren't professionals, and who we know have a terrible track record?

The paper describes the target audience at about 3-5% of the public. That means you are dealing with about 5 million people, who are charged a substantial fee for the privilege. It is extremely unlikely that you will find even a small fraction of this audience as 'no investment training'. These people want to diversify their retirement income streams. In my case, I would walk away (today) from 50% of the income stream if I could get into a program that guarantees the other 50%. I am happy. Social Security gets a benefit. Everyone is better off.

The idea is designed around the fact that less than 10% of the public wants to be bothered with the details. The average guy doesn't know or care about these accounts. To him, Social Security's shortfall magically fell, and well Betty Lou I am going to get paid after all. That is all the average person wants.

Is it possible that I would foul-up the principal. Yes, but I am eating such a large amount of the cost that Social Security is much less than likely to lose money on me. There are challenges, and I think that the paper discusses one of the more serious problems. It is possible for me to buy securities in which I have a personal interest. We remove that possibility with layers of investment decisions. I am sure that there are better solutions which are cheaper, but it isn't a plan. It is an example.

 

[JoeTheEconomist]

And why would any manager, in their right mind, take that deal? The only way I can imagine it is if they get paid a fixed income, which will obviously reduce the returns.

As someone who manages risk, surely you understand that increasing returns also increases risks, and no one is going to take the fall for just the risk portion. There's no free lunch.

I happened to do some market research on the idea. Our problem wasn't that no one would join, but rather everyone would. The phrase putting your money beyond the control of Congress is a marketing message that appeals to everyone - whether it is a good idea or not.

This solution doesn't appeal to you. You are part of the 95% who really just don't care about them. I am on the other hand interested in diversifying my retirement income, and I am willing to pay a price for it.

Risks do not increase. In fact diversification reduces risk. Today I am at significant risk of increased means-testing. I am at a significant risk of voters reducing their commitment to the program - real or imagined - I want to diversify away from that risk. If the world decides that they do not value the dollar as much, I am still OK. The question is whether it is worth it to the individual not to you.

It is insane that we have a retirement tool that is completely insensitive to risk appetite. It is comically stupid.

 

[JoeTheEconomist]

Let me and my generation opt out.

That's great. Now how do you let your self out without causing a massive crisis on today's elderly. Here is what people are told... We will phase it out. That is a lot of malarkey. It is the our children will pay the price that we won't.

Here is what happens : We will shift the financing from a payroll tax which creates benefits to an income tax which creates no liability. And we will tell future workers what a great deal that they are getting. I don't mind if you say that you are going to tell retirees to pound sand. That is an honest statement. What isn't honest is renaming the tax, and telling people that they are better off because of the name.

 

[UtahBill]

For myself, I fixed it decades ago....I knew better than to depend on any one source of retirement income. There will be some radical shifts in our individual economics whatever Congress does. Best to be a pessimist and start preparing for the inevitable, that government will discover that it CANNOT solve problems simply by throwing tax payer dollars at it.

 

[JoeTheEconomist]

No, I'm looking at both. The Trust Fund is invested in securities that on average, mature in 7 years, and max out at 15 years. Are you genuinely suggesting that the federal government is likely to default on those securities? (If so, then I'd say that a you should be freaking out about a lot more than just Social Security.)

No I am not suggesting that a default by the federal government is likely. I think it is unlikely, but that doesn't mean that I don't want protection against the possibility. AIG was a marvelous company that could print money in CDOs because they never would be paid-off. The company booked the revenue as profit, maintaining no reserve. I am a risk manager. Your actions aren't about what is likely but guarding against the unlikely.

I am never going to be the richest man on earth. I don't even try. I do however spend a lot of energy trying to avoid the potential pitfalls in the market.

You can't be interested in the first and last dollar risk at the same time in the same instrument. They are mutually exclusive because the first dollar sold affects the last dollar received. You must be interested in one or the other. Here I think that there is very little market risk, but you have to consider the Black Swan. The event in which you have to liquidate the Trust Funds assets in order to pay benefits.

 

[JoeTheEconomist]

For myself, I fixed it decades ago....I knew better than to depend on any one source of retirement income. There will be some radical shifts in our individual economics whatever Congress does. Best to be a pessimist and start preparing for the inevitable, that government will discover that it CANNOT solve problems simply by throwing tax payer dollars at it.

Utah :

Tell Visbek how much of your potential SS benefit you would walk away from if you received in exchange a guaranteed asset which Congress couldn't touch. I would give up 100% of my future benefits in order to get 50% of my benefits guaranteed. That would save the Trust Fund roughly $200,000. Would I get that $200,000 back, unlikely.

Visbek : This guy is the target audience. "Best to be a pessimist and start preparing for the inevitable" This person does not look at the world as you do. So when you ask who would take the deal you are missing the larger point. Our problem isn't that no one would take the deal, but rather you would have too many people trying to get on board.

 

[JoeTheEconomist]

Most critically, it is unjustifiable to claim that diversifying the Trust Fund will fix the issues. Again, it's unlikely to do much more than close the gap by 20-25%, let alone push back the "Day of Doom" from 2033 to 2089, let alone permanently adjust the issues.



I wouldn't use the term "misled," I'm more confused by the way it is presented. What I cannot tell is:

• Are you actively advocating some or all of those plans?
• Do you, or do you not, recognize that those "New Ideas" are just other ways of cutting benefits and increasing revenues, which you claim is off the table?

I am not saying that diversifying the Trust Fund would fix the gap. I think that the Trustees say increasing the Trust Fund's real return by 1% will add maybe 1 or 2 years to the life expectancy of scheduled benefits. The savings is getting people like me to line-up to have their benefits 'increased' - while giving them substantially lower nominal benefits. We are lowering the cost of providing higher-valued benefit packages. Keep in mind, you may not see them as more valuable - and you won't be part of the 5%.

The site provides one-stop shopping. The point isn't to tell people what to think. There are 50 sites willing to do that. The point is to give people a resource to find what is available in the market in an unbiased way without all of the polarizing jargon. Reform Social Security as you wish.... so long as we have an honest discussion about the changes.

 

[JoeTheEconomist]

er uh Joe, what do you think happens in 2033 when SS "collapses"?

Why would you insert 2033? If Social Security would collapse because benefits faced cuts, the market of politics will be forward looking and will cause an implosion long before 2033. The politics of the 2030s may be one of voter appreciation of higher taxes. More taxes in, only creates greater benefits out later. You change nothing other than the date of the collapse. So why do you think that the collapse will occur in 2033?