"Tick, tick tick goes the clock. We have sixteen short years until things in the Social Security fund get real bad, real fast."
How is the biggest Ponzi scheme in the world going right now? Oh, you must mean Social Security. The program, NONE of us had the choice to get into or not. Then for our entire working lives, we (if we worked for someone) and our employers kicked in 12.4% of our wages up to a limit of $118,500. This flow of money would sustain us in a rich and relaxing retirement. Except this is not true. This was a false narrative.
This year the fund is paying out more than it is taking in. That trend is expected to continue. If Congress does nothing on this issue (and they have been very good at that for decades), the fund will run out of money by 2034. Totally broke? No - but broke enough to cause a cut in benefits.
So, what do we do? What can Congress do? First off, Congress can do plenty, if they have the courage. First off, be truthful. This wonderful program created by FDR is flawed. It always has been. If we had a ton more workers kicking in to the fund than receiving benefits, we would not have a problem. But we now have a ton more receiving benefits than kicking in. The fund is like Lake Meade in the middle of this historic drought. Every year, the lake level gets a bit lower.
The next thing I would do is take the cap off of earnings. While working, you continue to pay in no matter how much you make. I know, I know. That is not fair. It gets worse, and here comes the tough part. If you are under age 40, rather than you and your employer kicking in 12.4%, that amount should go up .1% every year until that amount hits 15%. Since 3 out of 5 Americans get most of their retirement money from Social Security, that increase should be an adequate amount to keep the fund alive for a few more decades.
The Baby Boomers will luck out and be at the end of their run before the fund shrinks into trouble. That is if Congress continues to do nothing. Young people take notice. You are the ones who really need to be climbing all over your Congressmen or women when they are in their home districts. Ask them what the plan is right now. Demand action be taken. Trust me - they all know what the current status is. But as we all know, there is a big difference between knowing and doing.
Tick, tick tick goes the clock. We have sixteen short years until things in the Social Security fund get real bad, real fast. Right now, Congress is concerned more with Russia and our elections than it is maintaining Social Security. They need to walk and chew gum at the same time.
One financial expert I heard a few years ago had a dire warning for us all (if I may paraphrase a bit) - "There will be pain in the fix. Every year we wait to start the fix, the pain will get worse. But if we do nothing, the pain will be unbearable."
That paraphrased quote was from the Simpson - Bowles Debt Commission in 2012. Right now it is 2018. We are six years deeper in painful resolution to our Social Security problem. Get the picture? Next year in 2019, the pain will be even worse. Just saying. Talk to your congressional representatives. And sooner, rather than later.