Friday, August 16, 2013


The Social Security Board of Trustees released its annual report a few weeks ago on the financial health of both the retirement and the disability trust funds.

The report projected that the retirement trust fund will be depleted in 2033, although I have read other estimates placing this in 2026.

A few days prior to this announcement, Donald Fuerst, senior pension fellow at the American Academy of Actuaries, testified before the U.S. Congress about Social Security's pending shortfalls. 

He said that in 1940, when the new Social Security Administration began paying monthly retired-worker benefits, the retirement age was 65. At that time, workers who survived to age 65 had a remaining life expectancy of 12.7 years for men and 14.7 years for women. 

By 2011, life expectancy at age 65 was 18.7 years for men and 20.7 years for women, an increase of six full years for both.

The bottom line: If something doesn't change, we won't have enough money to pay the Social Security that is promised, a retirement planning disaster.

Fuerst offered Congress several suggestions for fixing this problem. His most controversial idea is probably raising the minimum age for collecting Social Security from 62 to at least 64.

Here's what he'd also do to make an increase in retirement ages less painful for workers:

Gradually phase in any change over an extended period of years, even decades, to allow for more time for society to adapt to the new work-life reality. "Give people time to plan and prepare. You wouldn't want to change it for someone who was planning to retire the next year. None of us would consider that fair," Fuerst says.

Reduce benefits for higher-paid workers. "Wealthier socioeconomic groups recently show more longevity improvements than poorer socioeconomic groups," Fuerst points out.

Cut or eliminate the wage tax for both employers and employees for people between ages 62 and full retirement age. It would give an incentive to both groups to keep older workers on the job.

Will a plan this complex and drastic ever wend its way through Congress? Fuerst thinks it should, but he isn't optimistic. "It isn't going to be easy; there are too many competing interests," he says.

There is no Constitutional authority for this entitlement program, and the decline in birth rates since the end of the baby boom has made it impossible to sustain this program.

While I think it inherently unfair to have taken money from someone their whole working life under the premise they'd get it back, it is probably realistic that higher-income workers and workers who saved for their retirement will get screwed in an effort to keep the program afloat for low income workers and people who bought new BMW's that they could not afford.

Every time our president says he plans to redistribute wealth, this is what he means.

Low income Americans are foolish enough to think there is enough wealth to elevate them to Bill Gates status.

The reality is, they'll get a new iPhone every few years (if they renew their plan) and will be able to afford the better brand of cat food in retirement.

And the rich will still be rich.

That's how it works.

Social Security cannot be saved, so what needs to happen is politicians get serious about how to address this serious problem.

But they won't. 

They will worry about re-election.

"I've got problems of my own,
Like staying fat"
-Utopia, Swing To The Right

I recommend you buy precious metals and bury them in your yard. That way, Obama can't find it to redistribute it.

Otherwise, stock up on cans of the Friskies turkey dinner with cheese (shredded). My cats love it.