Band-Aid Fixes to Social Security

I remember a time when I was a young man fresh into my career as a financial planner. The year was 1981, and just like today, the news was on fire with talk of Social Security funds eventually being depleted. But being that I wasn’t anywhere close to retirement age at the time, I didn’t pay any attention. 

I SHOULD have. 

If you’re one of some the 69 million Americans who receive Social Security or SSI benefits, you'll notice some changes in 2020. 

Sounds promising, doesn’t it? Like they’re making changes to secure the future of the system. They sure WANT to sound promising, with the way they’re carrying on. But the truth is these changes (or nudges, really) do nothing to meaningfully alter the forecast of a Social Security deficit in 2034 and a Medicare deficit in 2026. 

Here’s a quote from the Social Security Administration 2019 report: 

“Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.” 

That’s not good, folks. 

Remember that the “funds” everyone’s always talking about are not technically in an account, but instead are an accounting entry on the government balance sheet. It’s not as if the government has a savings account set up somewhere like we do. Our money isn’t sitting quietly tucked away and gaining interest. 

Now, it may have started out that way. Back when Social Security was first established, the government set up a trust. But somewhere along the way the government quit putting money into that trust and started spending it. So now that trust is long gone – or, if it is still there, it’s just full of IOUs. 

The problem with that is while the government deficit is continuing to grow, more people are hitting retirement age than ever before. I know it’s kind of a cliché right now to “blame the baby boomers”, but let’s ignore that silliness and just focus on the facts. Baby boomers make up a huge generation of people. In fact, in 1957 (the year I was born), more babies were born in the U.S. than ever. The government is running deficits on normal funding while at the same time we have more people taking money out of the system than ever before. We DO have a real problem concerning the future of Social Security. The system is under-funded and severely abused. The changes listed in that article are far too insignificant to handle or solve our problem. 

Like trying to put out a forest fire with a garden hose. 

One of our biggest issues is that the public’s expectation is higher than the reality. Everybody says, “Don’t mess with my Social Security!!” A fair proclamation, but that individual mindset is the root of the problem. Because Social Security isn’t just MY money or YOURS. 

It’s for EVERYONE. 

We’re ultimately shooting ourselves in the foot, because politicians aren’t willing to touch the issue with a 20-foot pole. We have a direct quote from Social Security up there telling us we have a very real problem on our hands, but politicians aren’t saying anything. 

That ultimately means we’re all going to go over the waterfall together. 

If I was young, I would be screaming bloody murder. Young people are going to be paying their entire lives to (hopefully) get what they should when they reach retirement age. Meanwhile, those of us currently at or near retirement age are able to enjoy the benefits of the system. 

I wish I could go back in time and make that young man understand that Social Security isn’t just an issue for ‘old people’. It doesn’t just cover retirement. Social Security covers A LOT of things: old age, survivors, disability, income. That’s way more than it was originally created to handle. We’ve expanded the coverage, but not the funding – we’ve in a sense created a monster that can’t feed itself. 

That’s not to say it’s a hopeless cause. Social Security has the potential to be what it was created to be if it’s taken care of properly. 

That’s why the time for change is NOW. If today’s youth wait until retirement age to worry about Social Security, there won’t be anything anyone can do. 

If I was still young, I’d really pay attention and realize the hole we’re digging for ourselves is getting deeper and deeper, with no willingness from Congress to address the matter. At some point, we must get to a place where we say, “Yikes!” 

Let’s re-jigger the system now so that young people will have a benefit. 

I think most of us are familiar with the letters “WTF”. Well, let’s say that WTF = “What The FICA?” FICA is something we all see being taken out of our paychecks from Day 1. Now ask yourself: how is FICA helping me, helping society? IS it helping? 

A change in perspective just might be in order. Perhaps we could all aim to get to a point where we can say, “I expect to receive less from the government and pay more and feel good about it.” 

We all need to look outside ourselves and realize that the changes being spouted at us are not meaningful. We NEED meaningful changes immediately. And the younger a person is, the more they ought to care. 

  

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