Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

The Horrifying Plan For Social Security

By Guest Post. Originally published at ValueWalk.

This piece originally ran on FedSmith.Com

In July the Trustees of the Social Security Trust Funds issued their annual report, detailing the continued deterioration of the program’s finances.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

Timeless Reading eBook

Also read:

Social Security
By US Government (Social Security Administration) [Public domain], via Wikimedia Commons

Despite a gloomy outlook, the media largely ignored the results. The media largely echoed the Social Security Administration summary, “By most measures, there is little change from the 2016 report in the outlook for the combined OASDI Trust Funds, with annual balances slightly better in the short term and slightly worse in the long term.”

We have become complacent about these numbers.

What measures are you looking at?

  • Total Shortfall + 1.2 Trillion, up 10%
  • Years to insolvency down 1, or – 5 percent
  • Tax solution up roughly 6 percent
  • Benefit reduction solution jumped more than 5 percent

Virtually every metric that I watch deteriorated by more than 5 percent in a year over year comparison, so I have to ask what results would have inspired concern over the changes in the forecast.

The figures mean:

  • The increase in the unfunded obligations in 2016 surpassed the entire revenue pool collected by the program.
  • Someone turning 69 today expects to outlive the system’s ability to pay scheduled benefits.
  • More than 80 percent of voting aged Americans expect to be alive in 2034.

Complacency rules the electorate

These aren’t simply possibilities.  They are likely outcomes! And the public yawns.

It is possible that the public is generally weary of the idea that Social Security is going to into crisis. It has been on a downward trajectory for nearly 3 decades, accompanied by a polarizing debate that is generally combative and unproductive.

Causation aside, the response to overwhelming statistical evidence showing the unsustainability of the program is: even if Congress does nothing, you will still get 77% of your benefits. To state the painfully obvious, it wouldn’t be a crisis if things go according to plan.

Part villain, part economic theologian

“No one panics when things go according to plan even if the plan is horrifying.” ~The Joker (The Dark Knight 2008)

Crisis is a byproduct of panic. The financial crisis of 2008 was less about sub-prime mortgages and more about a broad-based complacency to risk that proved to be real. The risk of default was always there; we were just oblivious to it. Once the risk was revealed, people panicked, sending even performing loans to the range of $0.22 on the dollar.

The loan quality didn’t change. Our fear of it changed. No one plans for fear.

The plan is horrifying

At this point the plan seems to be: allow the system to run short of funds until it runs short of money at which point we will have reductions in benefits.

For millions of seniors, a crisis in Social Security will operate much like a tsunami that specifically targets those that can’t swim. This program isn’t like other government benefits where reductions will be met with adjustments. If we cut farm subsidies for wheat, farmers will switch to corn. The elderly and disabled do not adjust nearly as well to economic change.

1/3rd of seniors collect 90% of their income from SS benefits

This uncertainty should worry seniors today because millions depend upon the system. As bad as benefit cuts sound today to seniors, dependency on the system is going to rise over time.

We think of seniors as widgets, where one is the same as the next.  It isn’t true.  Dependency on Social Security rises with age.  Between the ages of 65 and 80, the percentage of people collecting 90% of their income from Social Security nearly doubles.

Our view of the future of the program is drawn from a snapshot of today as though the system will serve the same type of audience tomorrow.  The snapshot that we consider today reflects the bulge of Baby Boomers at an age where dependence upon Social Security is generally less. As these seniors age, dependence upon benefits is almost certain to rise substantially over the next 17 years.

How much will dependence rise? We don’t know. The source of the data stops tracking dependence by age at 80, which is about 5 years short of the average life expectancy of a retiree.  80 isn’t old-age.

Our plan is to cut benefits at a time when dependence upon benefits is substantially higher.

Here is the horrifying part of the plan

In reality, we do not really know the timing, or the size of the crisis. We do not even know how these reductions would be allocated to the individual. The really horrifying part of the plan is that there is no plan.

Article by Brenton Smith

The post The Horrifying Plan For Social Security appeared first on ValueWalk.

Sign up for ValueWalk’s free newsletter here.


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!