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Time to fix Social Security

By Jennie L. Phipps · Bankrate.com
Thursday, August 5, 2010
Posted: 3 pm ET

The annual report on the health of Social Security and Medicare was released today and the news was so-so, especially for younger people who are concerned about retirement planning.

  • Medicare, which serves 46 million retirees and people with disabilities, will continue to be able to pay the bills -- thanks to health care reform -- until 2029.
  • Social Security, on which 53 million seniors and disabled people rely,  will spend more on benefits than it receives in payroll taxes this year and in 2011. Starting in 2015, it is likely to run a deficit every year, but there will still be money to pay promised benefits in full through 2037. Beginning that year, payroll taxes and other income would only support about 75 percent of benefits.

The report was prepared by the Office of the Actuary, which is part of the Department of Health and Human Services, although the findings were announced by Treasury Secretary Timothy Geithner and Health Secretary Kathleen Sebelius.

Now's the time to do something about the long-term viability of these two programs. Their demise would be a disaster, affecting not only those people who have no other options, but also making life more difficult for people who have been wise in their retirement planning. Aside from the humanitarian aspects of the failure of this safety net, the drag on the economy would be horrendous.

What happens next will be decided in part by the 18-member bipartisan committee set up by President Barack Obama to fix the deficit after the November elections. AARP is already lobbying against raising the retirement age or cutting benefits.

To me, raising the retirement age doesn't seem like such an untenable burden. I think about my grandmother who died 30 years ago after being a farmer's wife for 40 years. At 65, she had lost all her teeth and her arthritis kept her from moving freely. She ultimately died from skin cancer that she ignored, probably for years, in part because there were no doctors near where she lived in rural West Virginia.

Today, we address those problems and we're getting better at doing it. At 65 or 66, most people are still healthy and able. Asking them work a little longer isn't unreasonable.

Sixty-five is the new 50.

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5 Comments
Joe
September 13, 2010 at 5:34 pm

How about the Government paying the trust fund back and then have congress stop spending what is not there's. Take it out of the Budget would also help and never should have been there in the first place. It seem's the Rep. don't want it and never did, and the Dem's want to spend it faster then it come's in. As for the younger generation, if the Government brought back the industry that has gone out of the country we wouldn't have the problem of funding S/S or Medicare at all. Maybe the poitions should stop giveing them self so much pay and benn's that the rest of us tax paying public don't have or will ever have, maybe they could work for LESS as we do, maybe cut them back to 1950 scale of pay?

Chris
August 10, 2010 at 5:29 am

That is fine if you all want to end the "Ponzi" scheme but I want my Social Security(FICA) deposits back with interest!

Chris
August 06, 2010 at 1:31 pm

Social Security is the biggest Ponzi Scheme of all time. Its inevitable that it will go bust and everyone that contributed will lose all of their money. Bernie Madoff would be very impressed.

End the Ponzi scheme
August 06, 2010 at 1:26 pm

Why fix the Ponzi scheme. By definition they must all fail eventually, and "fixing" it only prolongs the agony of all involved.

This year "contributions" fell short of outflow, so where is the difference made up? You could say the "trust fund" which would be the correct answer if there was any real money there. Instead, there are IOUs from, you guessed it, the tax payers. So, not only do we get to "contribute" to the Ponzi scheme, we get taxed again to pay back the IOUs from burning through all the fund money as well.

The only practical solution is to end the Ponzi scheme. No politician will every say that, because AARP has duped its sheeple into thinking Social Insecurity is a retirement plan they deserve. It was supposed to be a token safety net of last resort, rarely used. Most were supposed to die before ever being able to collect, the actuarial tables placed the life expectancy perhaps a couple of years past the age you could start getting a check.

Where does that leave the young folks. Well, since we aren't paying enough in "contributions" to cover the checks, the trust fund robbers will have to start putting money back where they stole it from. That's either printing new money and devaluing the dollar, or raising taxes. Since 50% of the population isn't paying income taxes anyway, the few of us that are paying, see less and less of what we worked for come home.

Now that the worker to collector ratio is 3.3 to 1, and dropping, and the average check is about $1000 a month, that means that each worker is responsible to pay $333 a month for their part of a retiree. Since most pay nowhere near this in "contributions" the rest will come from the trust fund repayment tax, which makes up the rest. However, since 50% pay no income tax, we can guess that the makeup tax won't go to them either, so tax payers are looking at $600 a month to pay their retiree. $7200 a year gone before anything comes home.

End the Ponzi Scheme NOW.