Social Security Is Not a Ponzi Scheme


There has been a lot (probably too much) talk of late that the Social Security system is in trouble and needs to be fixed.  That talk comes mostly from politicians who know little about the system but a lot about how to scare folks into voting for them–although in the case of Social Security the scare tactics are likely to backfire.  Older people vote in greater numbers than younger people, and older people are not likely to vote for a candidate to talks so recklessly about the one retirement plan that they can count on (their private pension plans and 401k’s being much less secure).

Repeatedly we hear that as the baby boom generation reaches 65, they will bleed the system into bankruptcy.  Those who make such statements seem to be under the impression that baby boomers are immortal.  But the grim facts of death and taxes remain incontrovertible.  Even as baby boomers reach that landmark age, they will also begin to die off.  The majority of us will be dead by the time the “deadline” for insolvency of Social Security is reached.  We have, in fact, already begun our die off, as the recent passing of some of my friends all too pointedly illustrates.

It is true that some of us, perhaps more than ever in history before, will make it to 80, and that some of us will even hit 90 or 100.  But most of us won’t.  Those are just the facts of life.  And each time a baby boomer dies, he or she will be taken off the Social Security and Medicare rolls.  In fact, if, say, a person dies two weeks after receipt of his or her monthly check, the Social Security Administration will take back the remaining two weeks worth of money (as I discovered when my parents died).

What this means is that baby boomers’ pressure on the system is temporary and will gradually be reduced over time and be totally removed in the not too distant future.  But politicians have no real sense of time–“not too distant future” means the next election, not 25 or 30 years (which in a historical sense is in no time at all).

Interestingly, both the Brookings Institute (liberal) and the Heritage Foundation (conservative) agree that Social Security is not in trouble, does not need an immediate “fix,” and later will likely need only “adjustments” to survive.  They also note that while life expectancy for the well-to-do is higher than in the past, for those of lower and moderate incomes, it has not increased.  Thus, raising the eligibility age for Social Security will harm those most in need of it.  So the attacks on Social Security are ideologically driven and thus have no relation to the facts.

See the PBS News Hour interviews with representatives of the Heritage Foundation and the Brookings Institute by clicking here.

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