2016: The National "Cry For Help"

[David Horn]

(01-06-2017, 09:27 PM)Warren Dew Wrote: I'm afraid you've heard from people who don't understand how the Social Security trust fund works, and probably don't understand finance at all.

The Social Security trust fund is currently at about $2.8 trillion, thanks to Reagan era changes and all the money boomers have pumped into the system.  That money is invested in special government bonds that have slightly more favorable terms than the bonds that you and I can buy.  Some conspiracy theorists refer to purchase of the bonds as "diversion" of Social Security funds, but that's only true if you think buying GM bonds in your IRA constitutes "diversion" of your money to GM.  You get the money back when you sell the bonds or when they mature.

The problem is that us boomers are now retiring.  We were sufficiently more numerous than the GIs and Siilents that we paid for to stack up some excess in the trust fund.  Unfortunately, the X and Millenial generations are not sufficiently more numerous than us even to keep up with our payments.  As a result, the trust fund is likely to be exhausted some time in the next couple of decades.  It would need another $32 trillion to avoid eventual exhaustion.

The $2.8T Trust Fund, which is a dubious construct, is adequate through 2037: 20 years.  Most of those years, X is the generation earning the most per capita, but is the smallest per cohort.  Boomers are joining the retired class, then moving on to their next engagement.  The net group will be X (smaller numbers) with Millies paying in.  Why do we need $32T beyond that, unless you are counting until the end of time.