RSSNumber of Workers per Social Security Beneficiary
The number of retired workers is projected to grow rapidly starting in 2008, when the members of the post–World War II baby boom begin to reach early retirement age, and will double in less than 30 years. People are also living longer, and the birth rate is low. As a result, the ratio of workers paying Social Security taxes to people collecting benefits will fall from 3.3 to 1 in 2006 to 2.1 to 1 by 2032. The Trustees Report projects that in 2017, when the ratio will be 2.7 to 1, there will not be enough workers to pay scheduled benefits at current tax rates. The Trustees Report also projects that redemption of trust fund assets will be sufficient to allow for full payment of scheduled benefits until 2041.
The preceding paragraph, taken almost in its entirety from Fast Facts and Figures About Social Security, 2007, does a good job of explaining one of the dilemmas of Social Security, which is that the declining demographics of the U.S. population will not support the oncoming retirement wave. Once again, however, the reader is left with the impression that the real problem is more than thirty years away when the report says that “trust fund assets will be sufficient to allow for scheduled benefits until 2041.” This statement assumes that in the year 2017 the general fund of the United States government will begin redeeming the notes (the so-called trust fund assets) held by the Social Security Trust Fund. What is never mentioned, however, is that if there is no change in fiscal policy, the government will have no choice but to borrow the money in the open market to redeem the trust fund notes.
6 Responses to “Number of Workers per Social Security Beneficiary”
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June 15th, 2008 at 10:43 am
It is a simple matter to means test social security. If net worth exceeds some limit, benefits are reduced. At some point the person gets no benefits. Someone with $2M in assets (including real estate equity) should get paid no SS benefit. This seems very easy to implement, but the politics of “I paid into SS and I want my money back” will keep this from happening.
June 15th, 2008 at 11:47 pm
In response to jims….
The problem with placing some arbitrary number, such as $2M, on anything is that the United States is a big place. A $2M house in San Diego is a much different house than a $2M house in rural South Dakota.
Or consider an aging farmer with a large spread of land. The land and equipment might have a net worth $2M, but it is unrealistic to expect that farmer to be able to live off said land.
Arguments such as jims’s tend to lend itself to changing social security into a means of wealth redistribution. That is not the purpose of social security.
June 16th, 2008 at 8:17 am
Perhaps a farmer with a net worth of $2M in land and equipment should take personal responsibility for his/her finances late in life and sell the place or - more realistically - make use of a financial instrument to use the wealth that has been accumulated in the land and equipment.
The problem with arguments such as preeder makes is that people who have a ton of money in the bank still cash checks from an almost bankrupt social security system.
June 17th, 2008 at 1:08 pm
I can’t help but think JimS has this backwards. There will always be an exceedingly small group of people that has never wanted for anything. But for the vast majority, what JimS proposes would punish those who have worked hard and sacrificed for decades to prepare for their retirement. People who have saved even when they didn’t have money and have resisted any luxuries to secure their future.
While there will also always be a sizable group that simple can’t afford to save anything for retirement. I would think the majority of the group of people JimS proposes to save are those that simply chose not to worry about retirement because they assumed somehow they would get through or the government would take care of them. I have a hard time swallowing that approach.
While I would not want to abandon people who have no other source of income, I can’t see punishing preparation and rewarding procrastination. Sorry, but a different approach is needed.
June 18th, 2008 at 9:16 pm
PatG, I’m not sure my point was clear. Doesn’t it seem some how messed up that our social “security” system will send Bill Gates a check every month? Nothing wrong with Bill Gates - worked hard, earned a lot, captain of industry. But our social security system has NO limit - that just makes it more expensive.
And I have to ask, what happens to Preeder’s farmers $2M in land and equipment when the couple dies? I just think we hard working, self responsible people should first live off what we’ve earned before we look to the government to send us a monthly check.
Maybe I’ve missed PatG’s point. Are you advocating the complete elimination of social security? I’m curious.
August 11th, 2008 at 7:01 pm
JimS is on target. The problem: U.S. gov’mt has GROSSLY over-promised. Solutions: either (1) TRIM back NOW on promised benefits ; or (2) DO NOTHING, and wait for a TOTAL DEFAULT in the future. Which sounds better to you?
A combination of approaches is probably needed, including: (1) gradually expanding retirement age for ALL (by 2 - 5 years); (2) gradually reducing benefits by means-testing for SOME; and (3) gradually shifting towards private style accounts.
And, God forbid that our #@*! “leaders” create any NEW “entitlements”, like the idiot Bush (i voted for him) and Congress passing the recent senior drug entitlement law. Talk about throwing gas on the fire!
Sadly, reform will likely never happen because it requires something more rare than weapons-grade plutonium: political courage and leadership. McCain doesn’t have it, and Obama SURE doesn’t have it. Wish we had a democrat like Andrew Jackson or republican like Lincoln again!