Ideally, Social Security would have been a trust fund in reality, not just name. However, a large surplus is a golden thing in the realms of politics, so the urge to take money from the trust fund for something or other important was great and they replaced some parts of the trust fund with IOUs, which is fine except that when the fund needs to start drawing on those IOUs, the government will then have to transfer money from the general fund to the trust fund to cover it. That represents a lack of money then for other projects and a tightening of the budget. Essentially the previous political regimes kicked the can down the road. So that is one big problem.
However, structurally, the issue you seem to be talking about is more simple. Lets say that there are 80 million people in the baby boom generation (no clue who many there actually are). And lets say a normal generation has 60 million. When the baby boomers entered the workforce, there were 60 million people from a previous generation retired (simplified for the sake of demonstration). Those 60 million had payed in some amount, however they had payed in a lesser amount because their wages were less early on because the dollar was cheaper. Inflation had happened in the meantime. So the baby boomers now have to help cover the difference between what the previous generation paid in and what that generation needs to survive on in retirement. It isn't paying for all of the previous generation, mind you, but rather the gap. Now that wasn't a problem because the baby boomer generation was much larger than the previous generation. However, the generations after the boomers (X and Y and the Millennials) are smaller than the boomers by a fair bit. So you have a much smaller pool trying to make up the difference between what the boomers paid in and what they boomers will need to take out. That difference is a combination of inflation and increased life span. Fortunately, both of those things have been fairly tame the last two decades. But as the boomers die off, you'll be in a situation where you've got Gen X reaching retirement, then Gen Y, etc. and each of those generations, as far as I'm aware, is of pretty similar size. Hence each subsequent generation is helping subsidize the difference in what the previous generation put in and the needed output seen as a combination of inflation and longevity increases. This does seem to be a monotonically increasing mathematical problem, I agree. However, the structure of it is such that is it fairly small growth. There are a variety of suggestions on how to make the math work best in the long term, ranging from investing part of the money coming in so that compound interest can help close the gap to increasing the salary threshold that the fica tax applies to. The important parts, to me, are that the problem is a fairly slow growing issues and that there are solutions on the table which are largely agreed to fix the major issues. Now, whether we have the will power to do anything about anything is another matter. But the program itself is not fundamentally flawed in any important way and there is a lot of hope for seeing it continue on into the future. Judah On Sat, Nov 20, 2010 at 4:15 PM, Eric Roberts <ow...@threeravensconsulting.com> wrote: > > What you are forgetting is that if we are indeed going back to pre boom > levels, then that would be the level at which SS payouts would have been > made while boom contributions were being made, growing the fund larger that > what was needed for the payouts. Now that the boomers are retiring and > collecting SS, the excess that they contributed over the payouts would > supplement the lesser amounts being contributed. As post boomers retire and > start collecting, a lesser amount of payouts will be made, which will keep > pace with what is currently being contributed. So your logic does not hold > o ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Order the Adobe Coldfusion Anthology now! http://www.amazon.com/Adobe-Coldfusion-Anthology/dp/1430272155/?tag=houseoffusion Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:332059 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/groups/cf-community/unsubscribe.cfm
