Friday, May 8, 2015

"I don't know, I can imagine quite a bit."

Social Security is in worse shape than you can imagine:
The Social Security Administration projects that its trust funds will be depleted by 2033—not an optimistic forecast. But it may be even bleaker than that.
New studies from Harvard and Dartmouth researchers find that the SSA's actuarial forecasts have been consistently overstating the financial health of the program's trust funds since 2000.
"These biases are getting bigger and they are substantial," said Gary King, co-author of the studies and director of Harvard's Institute for Quantitative Social Science. "[Social Security] is going to be insolvent before everyone thinks."
I'm sure that isn't big news to my five loyal readers. To my generation's credit, nobody believes that there's a Social Security account with their name on it waiting for them when they turn 65. Everyone thinks of SS as just another tax the government takes and that they'll never see again. The money they take is either immediately paid out to current retirees or used for other government spending since money is fungible. And there are slated to be many, many more retirees than young people participating in the workforce. Old people vote in greater numbers than young people, so in the short term, SS taxes will go up because cutting benefits will be a political death sentence. The problem is that there simply aren't enough young people in absolute numbers to support all of the old people, not without raising taxes to ruinous levels. Raising the retirement age might be another band-aid but the system is terminal. It cannot be saved.

What does that mean for young people like myself? The historical blip in which the Baby Boomers lived popped a long time ago. Their life plan was go to college right after high school and major in anything at all, walk right into a job that pays enough to comfortably raise 2.5 children upon graduation, stay on the same career track for 35-40 years, and then retire with generous benefits. They raised their children to believe in the same life path, but I think all of us know by now that it simply doesn't work that way anymore, not even if you work for the State.

In a sense, we ourselves still live in a bubble, albeit a smaller and thinner one. We don't think much of the State anymore but we still expect it to do certain things. It's unlikely it will have the money for even that much. When that bubble pops, we're returning to the historical norm of the brutal struggle for survival amidst scrambling for resources. Retirement as we understand it could only exist within the Boomer bubble. I hope for your sake that you're independently wealthy, or that you have your dream job, or that you get along great with your children. By the 2030s we will have returned to the traditional ways of either working until you drop dead on the job or moving in with your adult children if you're too infirm to work anymore.

Make no mistake, there will be shooting when the State can no longer afford to dispense gimmedats, and that day is coming sooner than we expect. By the end of this century, I believe the United States will have broken apart into various ethnically homogeneous city-states with each squabbling tribe competing for dwindling resources amidst declining overall brainpower Basically, a post-nuclear holocaust wasteland, only without the nuclear holocaust.

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