A few years back a poll was conducted which seemed to show that people in their twenties thought they were more likely to see a UFO than they were to ever collect social security.
Now the results of that particular poll were problematic, but it is true that lots of young people take it as a given that they will never collect social security, because by the time they retire the system will have gone bankrupt. I hear this sort of thinking often, and its generally said with a sort of nonchalant cynicism, as if it would be naive to think otherwise.
Well, perhaps I’ve naive, but I expect that when I get old, I’ll be getting my social security check. Here’s why: As currently structured and funded, revenues from Social Security taxes will fall below projected Social Security expenditures sometime around 2018. Once that occurs, the difference will be made up from the “Social Security Trust Fund”. Depending on whose numbers you use, the “Trust Fund” will be depleted sometime between 2042 and 2052, at which point revenues from Social Security taxes will only be sufficient to pay for between 74% and 78% of expected benefits. So whether or not you think the Social Security Trust Fund is a PR sham (and I’m inclined to think that it is), at some point in the foreseeable future Social Security as currently structured and funded will no longer be able to sustain itself. And many people seem to assume, based on the fact that Social Security is currently unsustainable, that it won’t be around by the time they retire.
But this is a faulty inference. If a government expenditures are more than government revenues, there are two simple ways to solve the problem: You can cut expenditures, or you can raise taxes. Personally, I expect the government to raise taxes. The elderly are already such a politically potent voting block and are already so fanatically committed to receiving their benefits, that any attempt at reforming the Social Security system today can be blocked simply by stoking the paranoia of seniors about their not receiving their benefits. The percentage of voters near or over 65 is only going to grow in the coming decades, and I don’t see them becoming any more open to benefit cuts for themselves than they are now to hypothetical benefit cuts that wouldn’t even affect them.
Let’s say, though, that the government decides to cut benefits rather than raise taxes. As noted before, 2042 benefits would have to be as low as 74% of currently projected levels. That’s still quite a chunk of change. Somehow saying “I expect only to collect three quarters of what the government’s telling me I’ll get from social security” doesn’t have the same punch to it that saying you’ll never collect any benefits does. In fact, under today’s projections the benefits I would receive from Social Security would be about 40% more in real terms than the benefits seniors currently receive, due to the fact that benefits are indexed to wages rather than prices (and the former tend to grow faster than the latter). I’m not a math wiz, but 74% of 140% doesn’t sound too bad.
None of this, of course, is to say that we shouldn’t do something now about Social Security’s long term funding problem. The choice of raising taxes versus cutting benefits is going to have to be faced sooner or later, and the sooner we face it the less painful the ultimate choices will have to be. But whether we deal with the problem now or pawn the problem off on future politicians, Social Security isn’t going anywhere.
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