01-08-2017, 05:58 PM
(01-07-2017, 11:44 AM)David Horn Wrote:(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.
Spoken like someone who doesn't expect to live to 2037. Boomers aren't that big a group, by the way; the issue is that the birth rate has subsequently stabilized, so neither X nor millenials nor any subsequent generation is expected to significantly outnumber the previous generation on a per year basis. What's really playing havoc with Social Security is the demographic transition.
(01-08-2017, 01:05 AM)pbrower2a Wrote: Social Security is basically a pay-as-you-go system predicated upon the idea that every generation will do at least roughly as well as its predecessors in economic results.
Also on strong continued population growth, and, originally, on the idea that many people wouldn't live long enough to collect, life expectancy in the 1930s being around 62.