Social Security Is Dying Because Baby Boomers Aren’t

Off the Rails
Your Social Security Return on Investment
The Next Quadrillion
Missing Opportunities
The Best Birthday Present

I’m filing this letter on the day I turn 70 which, among other things, means I start receiving Social Security benefits this month.

The good news, at least for me, is I am getting a whale of a deal from Social Security compared to later generations. Frankly, I was surprised at my monthly benefit amount, because I never really paid attention to what it would be. That one payment will put me and Shane within shouting distance of the US median household income, and I am still working. It’s a far cry from my humble roots. I have been both blessed and lucky.

Unfortunately, my good news is also bad news for younger Americans, who won’t get nearly as much as my age cohort is collecting. Worse, they could actually see negative real returns despite having paid proportionally more into the system. In investment terms, they are getting screwed.

This is not a good situation, obviously, and is even more frustrating because it’s easily fixed. Back in 2006, Alan Greenspan said a group of experts could easily fix Social Security in about 15 minutes “only because 10 minutes was used for pleasantries.” And he had actually led such a group decades earlier: the 1981 Greenspan Commission which Ronald Reagan formed to recommend fixes to the system that was ailing even then.

Fixes for today’s problems are elusive because change is politically hard, especially when it requires sacrifice. But, as we will see, the sacrifice is going to happen anyway if we do nothing. You can’t take blood from a turnip and that’s what Social Security is becoming. Our present course will make the end (in the not-too-distant future) far uglier than it has to be.

Today we will discuss this exasperating situation, using my own situation as a convenient example. As you will see, the Social Security system is not working as intended. Its internal contradictions will soon be undeniable.