In 40 years, the 65 and older crowd will have risen from 12 percent of the population to 21 percent. Each year, the government supplies, on average, $21,000 in benefits in the form of Social Security, Medicaid and Medicare to people 65 and older.
In each year’s federal budget, the portion of government expenditure relegated to Social Security, Medicare and Medicaid rises unequally alongside government revenue: It grows much faster.
Eventually we reach critical mass, at which point there’s not enough money to go around and lots of old people have to cripple their children with financial burden or, gulp, live on the streets.
They can get jobs and work till they’re 80, right? Sorry. Other studies report that it’s becoming harder for those older than 60 to get jobs.
And Americans are retiring earlier and with less money saved than they originally planned.
More studies show Americans plan to retire at 65 with a certain amount of money but end up retiring at 62 with less money.
Now, some of this is natural. People are going to plan to have X dollars when they retire but find out later they didn’t save enough, didn’t make enough to save or lost their savings when Wall Street brutally ravaged its way to a bailout.
But isn’t it normal to assume you can withdraw and use the money you’ve paid into the system for decades? Why is it that the government will not have enough?
Well, here’s how Social Security works. You put money into a “bank,” which then invests your money in stocks and government bonds. Starting at a specified date, you start to receive payments from this account while the principal continues to accrue interest. Ideally, you’ll have enough money to receive payments until you croak somewhere down the line.
But with people living longer and retiring earlier (and thus accessing their accounts earlier), the “bank” (the government) will reach that point at which there’s not enough to go around.
And how many people are hitting the retiring age in a few years, right after their savings got wiped out when “irrationally exuberant” bankers sold and resold tranched credit derivatives?
In the same way a bank gets dominated when everyone tries to recall their loans at the same time, so the Social Security system will go belly up at some point in the future.
And are there solutions?
No. Or at least not any good ones.
Privatization comes up often, but there’s a lot of deserved fear with respect to a profit-driven enterprise governing the livelihoods of so many (didn’t millions just lose their savings within the very system proposing to “help?”).
We could overhaul the whole thing, but that titanic work would require, in the words of a professor, “a state of metaphysical certitude,” which, we can all agree, isn’t likely to present itself.
So, um, there’s no good answer, and there’s no good solution. Instead, you should just hope your college degree makes you enough money to buy your parents a living somewhere in Florida, otherwise they’re moving in with you and your spouse.
Jeff is a creative writing major. Reach him at jweyant@asu.edu.
