I was explaining to my 26-year-old son recently that while I’m continuing to work as a writer, because I waited until age 70 to begin collecting my Social Security benefits, I am now collecting almost $29,000 on top of what I earn doing my freelance journalism thing.
He said, matter-of-factly, “Well, I and most of my millennial friends don’t expect Social Security to be around when we reach your age…if we ever do.”
If that gloomy sentiment is widespread, and I believe it is (one recent poll found 71% of workers don’t think they’ll get Social Security), it’s no accident. There are a lot of scare-mongers out there, most, but not all of them Republican politicians and conservative pundits on cable and radio programs. These shameless shills for Wall Street’s investment industry are spreading the lie that Social Security is a “ponzi scheme” or that Social Security will go bust before young workers today ever get the benefits that they currently 6.2 percent of each paycheck deducted, supposedly to pay for.
Here is an example of the scare tactics:
“Social Security Will Be Insolvent in 16 Years” screams an article in the ironically named libertarian magazine Reason.
Another approach, popular in the financial advisory business, is to first tell people that fears that Social Security will go belly up, leaving future workers with nothing are “overblown,” but then to add that if nothing is done, the benefits they are supposed to get could be cut by 20% in 2034. That reduced benefit is an amount that could indeed be covered indefinitely by the payroll tax on current workers from that time going forward, but it would make Social Security even less adequate for funding retirees. This second attack on the system is typically followed by an admonition on the importance for current workers, especially younger ones, to “save and invest.”
That ‘s may great advice to give if you’re an adviser earning fees for “managing” that money, but in today’s low-wage, high cost-of-living environment, while it might be a good idea, the reality is it’s hard or impossible for most people to actually do.
Fortunately, the scare stories are all a lie. So here’s my message to you young whippersnappers like my son: Social Security isn’t going away, and it’s not going to even be cut 20%. In fact, the odds are that benefits in the future will be getting raised, not cut.
How can I say this? Isn’t the country getting grayer, with older retired people becoming an increasing share of the population? Aren’t old people taking all the money out of the Social Security Trust Fund and running it down to nothing, leaving nothing for their kids and grandkids?
Why the Lies about Social Security Won’t Work
Let’s get a few things clear. Yes, the country’s population is aging but as Baby Boomers like myself born between 1945 and 1964 — a particularly large demographic cohort now well into retirement age —start collecting our Social Security benefits, and as the next generation below us, now in their 50s, start thinking seriously about their Social Security benefits, all will want to ensure the durability of this crucial New Deal program, and not just for ourselves, but for you, our kids and grandchildren. Caring about our progeny, after all, is what most parents and grandparents do above all else.
Republican critics of Social Security, like former Sen. Alan Simpson of Wyoming (now 88 and notorious for once calling Social Security a “milk cow with 310 million teats”) have tried to incite a generational war between young workers and older retirees, the better to undermine and privatize the system. But this obscene strategy has never worked.
Why? Think about it: Have you ever heard a young person complain about the amount of retirement benefits her or his parents were receiving, saying those benefits were too great? Of course not! Kids and adult grandkids know that without Social Security they’d be having to financially support their aging parents and grandparents! Turning things around, have you ever heard old people complain that they need higher benefits and the hell with their children’s grandchildren’s future Social Security? No! Of course not. Here’s the reality: Older people have always been the strongest defenders of an enduring Social Security system that will be there for their progeny.
The reason I’m telling you to be confident in the future of Social Security is because everyone in this country depends on it, including you, especially as employers continue to eliminate company pension plans. And even if this democracy we supposedly live in is failing to live up to its promise, corrupted as it has become by the influence of money on politics, by lazy pro-corporate journalism, and by the deliberate misinformation spread by social media, if there are still elections in mid-century, and if there is still a functioning economy, there will be a Social Security System in place paying benefits. And those benefits will be at least at the level promised to those having the FICA payroll tax deducted from each paycheck to support it year in and year out.
All we have to do to ensure this is to vow never to vote for a candidate who doesn’t firmly back Social Security, and always to vote out an incumbent who goes back on that commitment.
That includes any new Alan Simpsons who might keep spreading the lie that the system is in trouble.
The Social Trust Fund is Supposed to be Depleted. That’s Its Purpose!
Now about that Trust Fund. It is starting to be depleted. That’s true. But what the media don’t tell you when they darkly intone that line is that the Trust Fund was set up in the early 1980s precisely because it was understood that retiring Baby Boomers would put a big drain on the system. The idea was to pre-fund some of those benefits and then to deliberately spend the Trust Fund down to zero to help cover the benefits as a wave of Boomers began getting benefit checks in 2007.
Faced with the challenge of funding Baby Boomer retirees, President Reagan and a Democratic Congress came up with a bi-partisan reform plan that combined higher payroll taxes by current workers, a slight increase in the so-called “full” retirement age, rising gradually from 65 to 66 and finally to 67, and taxes on some Social Security benefits. The combination of these changes predictably led to a growing surplus, eventually reaching over $2 trillion, a Trust Fund invested in Treasury Bills which it was thought would be sufficient to cover the looming cost of the those benefits.
Here’s the problem: In what should be viewed as a happy surprise, the birth rate has continued to decline, leading to a reduction of anticipated workers paying FICA payroll taxes into the system along with their employers, and longevity has also improved through medical breakthroughs and better health. As a result the Trust Fund has proven inadequate to the task. That is of course a good thing, but it means another adjustment is needed to fully cover Boomer retirement payments until that population wave is over sometime in about 2055 when the last surviving Boomers born in 1964 and still listening to the ‘80s Rock will be 91.
This actuarial problem has been known for at least two decades, and if our politicians were responsible people, they’d have tweaked things just a bit back then and we’d have no looming shortfall in benefits spread scare stories about. But Republicans have stubbornly refused to make those minor changes, like perhaps raising the payroll tax on employers and employees by 1% when that would have done the trick, or by raising the income level that gets subject to the payroll tax. Since they have refused to take any action, payroll taxes now would have to be raised by several percent, or the cap on income subject to the payroll tax would have to be raised significantly or eliminated altogether, making the wealthy pay a lot more than they’d get back in benefits.
The unstated goal of inaction by Republicans and some conservative Democrats has been to make Social Security too expensive to rescue, and thus to lead to privatization of retirement funding — something Wall Street has been trying to do for decades.
Time to Fight for What You Deserve
So your job, young people, is to not allow that to happen.
And you have the power to do that. Fully 79 million Americans will be receiving Social Security benefits by 2034. For the majority of retired couples those benefits will be their primary source of income, as it will be for 71% of single retirees. Cutting all those benefits by 20% would cause major pain, probably a long recession, and a national riot the likes of which this country has never seen.
The Social Security system we have isn’t perfect. Benefits are clearly far too low for most people to live on. But the system is nonetheless extraordinary. Despite being a socialist idea in a country that has always officially rejected and ridiculed socialism, it is hands down the most successful government program in the history of this nation. So don’t listen to the crooked doomsayers. Just vow to rid Washington of them!
Most of the rest of the developed world has government retirement systems that are far more generous than ours. They have kept those systems solvent too. This has allowed people to have secure comfortable retirement years, under socialist, liberal and even conservative governments, because the people of those countries, elders and their children, have demanded that from their elected officials.
We all, young and old, can have the same thing, but we need to demand it and to fight for it.