HJ's Declaration of Demographic War

[Hungary Jack]

Hold on people. This might be ugly.

There a lot of Baby Boomers out there who have put off retirement planning and have taken poor care of their health. Now the bills are coming due. Perhaps they are looking forward to Social Security and Medicare and Medicaid to bail them out. But these programs, at current trajectories, will be insolvent within a decade or two. The only feasible solution to maintaining current benefit levels would be to raise taxes significantly on workers in the generations behind them.

Memo to Boomers: Don't look to me to pay for your retirement and healthcare costs in retirement. I'll be paying for my own, thank you. You had better figure out the same. I sure as he77 won't be bailing you out.

This is the biggest voting block in the US population. They put Bush into office. They got prescription drug benefits. They stymied Social Security reform. They got cheap money and the housing boom to fuel their retirement dreams. These aren't the people who fought fascism in Europe. They vacationed in Europe. Some fought in Vietnam, and hopefully the DoD does what it can do to treat them better.

But the Boomers, as a whole, have enjoyed an unprecedented run of peace and prosperity. My generation probably won't. There is no way the younger generations should bear a huge tax burden to pay for the Boomers in retirement.

[Arthur Dent]

Ugh.

There is not a financial crisis in Social Security. It's completely made up. According to the Social Security Trustees, the program will be able to pay all scheduled benefits through 2041 (when the baby boomers will be mostly dead) and after that will still be able to pay 75-80% of scheduled benefits. Even at 75%, these benefits will be much higher in real (inflation adjusted) terms that those that are paid to todays retirees. Furthermore, this small shortfall could easily be fixed with small changes in the tax code such as eliminating the cap on income subject to payroll tax.

As to Medicare and Medicaid, there is a looming financial problem, but it has nothing to do with demographics. The problem is that health care costs continue to rise much faster than inflation. This applies to the health system in general and really has nothing to do with Medicare or Medicaid. If we fix our health system (and we must), these problems will go away.

[planet planet]

Ugh.

There is not a financial crisis in Social Security. It's completely made up. According to the Social Security Trustees, the program will be able to pay all scheduled benefits through 2041 (when the baby boomers will be mostly dead) and after that will still be able to pay 75-80% of scheduled benefits. Even at 75%, these benefits will be much higher in real (inflation adjusted) terms that those that are paid to todays retirees. Furthermore, this small shortfall could easily be fixed with small changes in the tax code such as eliminating the cap on income subject to payroll tax.

As to Medicare and Medicaid, there is a looming financial problem, but it has nothing to do with demographics. The problem is that health care costs continue to rise much faster than inflation. This applies to the health system in general and really has nothing to do with Medicare or Medicaid. If we fix our health system (and we must), these problems will go away.

I thought it was you who debunked the Social Security scare. Curiously, why does the age for full SS benefits keep increasing if there's no problem? I've always wondered why there was a cap on what you paid into SS.

[Arthur Dent]

Has the retirement age been increased recently? I thought the last change was in the 80's when there really was a looming problem.

[planet planet]

Has the retirement age been increased recently? I thought the last change was in the 80's when there really was a looming problem.

I thought it used to be 62 to get full benefits and now it's 65?

[Arthur Dent]

In 1983, the law was changed so that people born after 1960 can only get full benefits at 67. There's some kind of sliding scale that goes from 65 to 67 based on birth year, so the change didn't start having an effect until recently. You can still get partial benefits as early as 62. Before that, I think it was 65 for everyone.

[sighyoung]

Has the retirement age been increased recently? I thought the last change was in the 80's when there really was a looming problem.

I thought it used to be 62 to get full benefits and now it's 65?

Depends upon when you were born. The age to receive full benefits gradually increases--those born in 1938 must work until 65 and 2 months, for instance. Those born in 1960 or later must wait until they turn 67 to retire with full benefits.

http://www.ssa.gov/pubs/10035.html

[Hungary Jack]

According to most estimates, Social Security will remain fully solvent with full benefits through 2041, when, as AD notes, most Boomers will have moved on--after enjoying a lifetime of full benefits. But according to these projections, things could change considerably after 2041.

This is from the SSA Trustee Report of the future of Social Security:

Q. I'm 35 years old in 2007. If nothing is done to change Social Security, what can I expect to receive in retirement benefits from the program?

A. Unless changes are made, at age 69 in 2041 your scheduled benefits could be reduced by 22 percent and could continue to be reduced every year thereafter from presently scheduled levels. See the 2008 Trustees Report.

And another example:

Q. I'm 26 years old in 2007. If nothing is done to change Social Security, what can I expect to receive in retirement benefits from the program?

A. Unless changes are made, when you reach age 60 in 2041, benefits for all retirees could be cut by 22 percent and could continue to be reduced every year thereafter. If you lived to be 101 years old in 2082 (which will be more common by then), your scheduled benefits could be reduced by 25 percent from today's scheduled levels. See the 2008 Trustees Report.

This is precisely my point. Today's younger (under 40 taxpayers will be paying in at a full benefit schedule, but the trust assets will not be able to support a full payout when they hit retirement. Their contributions to the plan will fund the Boomers' retirements, not their own.

Obviously, much can change between now and 2041. But this is the picture as it stands today. And it is patently unfair.

[Simbagal23]

According to most estimates, Social Security will remain fully solvent with full benefits through 2041, when, as AD notes, most Boomers will have moved on--after enjoying a lifetime of full benefits. But according to these projections, things could change considerably after 2041.

This is from the SSA Trustee Report of the future of Social Security:

Q. I'm 35 years old in 2007. If nothing is done to change Social Security, what can I expect to receive in retirement benefits from the program?

A. Unless changes are made, at age 69 in 2041 your scheduled benefits could be reduced by 22 percent and could continue to be reduced every year thereafter from presently scheduled levels. See the 2008 Trustees Report.

And another example:

Q. I'm 26 years old in 2007. If nothing is done to change Social Security, what can I expect to receive in retirement benefits from the program?

A. Unless changes are made, when you reach age 60 in 2041, benefits for all retirees could be cut by 22 percent and could continue to be reduced every year thereafter. If you lived to be 101 years old in 2082 (which will be more common by then), your scheduled benefits could be reduced by 25 percent from today's scheduled levels. See the 2008 Trustees Report.

This is precisely my point. Today's younger (under 40 taxpayers will be paying in at a full benefit schedule, but the trust assets will not be able to support a full payout when they hit retirement. Their contributions to the plan will fund the Boomers' retirements, not their own.

Obviously, much can change between now and 2041. But this is the picture as it stands today. And it is patently unfair.

++ When I receive my annual social security statement, it devotes a section to the potential problem with the SS Trust Fund. So, yes, this worries me.

[Arthur Dent]

According to the just released 2008 Social Security Trustee report, benefits will have to be cut to 78% of scheduled levels in 2041 and reduced to 75% of scheduled levels by 2082 when I will be 100 years old. Again, even with cuts, these benefits would still be substantially larger than those paid to todays retirees.

Also, if you've been following this for a while, you'll notice that the date that the trust fund is projected to be exhausted keeps being moved out because the projections are actually quite pessimistic. This is a small problem that won't occur for many years which any number of small changes could fix. There's plenty of time between now and 2041 to handle this. It's like saying we're going to miss our turn because we didn't get in the right lane 25 miles before the exit. It just doesn't qualify as a crisis or grounds for a demographic war. Lets all hold hands and sing instead.