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Sort of related to the Population Decline thread, but I think it deserves its own thread, given the action that will be happening in the next decade.
The whole social security program was built on a premise that everybody pays in, but more people pay in than take out. For years, we watched as increasing longevity and shifting demographics eroded the base of that pyramid beneath our feet. We now are six years, give or take, from the Social Security trust fund being depleted. Once that happens, the payroll taxes still being collected will be split to cover as much of the benefits as possible, paying roughly 75% of scheduled benefits. Given the number of people who under-saved for retirement and are living on fixed incomes primarily coming from social security, that would be calamitous.
I would not put it past our congress to be too dysfunctional to come up with something before this happens. But most of the pundits I've heard speaking on the matter agree that the outcome is so unthinkable that we'll manage to come up with something to address it-- even if, in Churchillian fashion, we exhaust all other options first.
What that looks like remains to be seen. Revenue generation could come in the form of increased payroll taxes. Expenses could be cut by raising the age of eligibility, or cutting benefits generally. I expect the focus to be on the rich-- raising contribution limits, and reducing benefits for higher-income earners. It's probably the most politically expedient fix, even though it undermines one of the fundamental premises on which social security was built-- the expectation that you are getting paid back for the benefits you contributed over your lifetime.
Unfortunately, even though we've known about this problem for years, we're well past the point where comparatively smaller changes could have avoided a lot of the major downstream consequences. We've kicked the can about as far down the road as possible, and whatever solution we come up with is going to hurt.
The whole social security program was built on a premise that everybody pays in, but more people pay in than take out. For years, we watched as increasing longevity and shifting demographics eroded the base of that pyramid beneath our feet. We now are six years, give or take, from the Social Security trust fund being depleted. Once that happens, the payroll taxes still being collected will be split to cover as much of the benefits as possible, paying roughly 75% of scheduled benefits. Given the number of people who under-saved for retirement and are living on fixed incomes primarily coming from social security, that would be calamitous.
I would not put it past our congress to be too dysfunctional to come up with something before this happens. But most of the pundits I've heard speaking on the matter agree that the outcome is so unthinkable that we'll manage to come up with something to address it-- even if, in Churchillian fashion, we exhaust all other options first.
What that looks like remains to be seen. Revenue generation could come in the form of increased payroll taxes. Expenses could be cut by raising the age of eligibility, or cutting benefits generally. I expect the focus to be on the rich-- raising contribution limits, and reducing benefits for higher-income earners. It's probably the most politically expedient fix, even though it undermines one of the fundamental premises on which social security was built-- the expectation that you are getting paid back for the benefits you contributed over your lifetime.
Unfortunately, even though we've known about this problem for years, we're well past the point where comparatively smaller changes could have avoided a lot of the major downstream consequences. We've kicked the can about as far down the road as possible, and whatever solution we come up with is going to hurt.
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