Sunday, February 13, 2005

The Social Security Problem in a Nutshell

Actually, it's simple. SS benefits are increased based on the level of increase in wages, rather than the increase in costs (inflation). In a long period of very low inflation, such as we have had since 1980, payouts to non-working people who are drawing benefits rise at the same rate as wages paid to working people, which rise faster than the cost of living. Thus, fixed-income folk who draw ss benefits can not only maintain their standard of living, they can improve it, courtesy of the taxpayers still working.

This is the result of fifty years of congressional tinkering, and it bears no relationship to social security as it was created. It's not rocket science, it not even complicated, like the politicians on both sides make it sound. People live longer and benefits rise faster than the cost of living. So people collect bigger benefits for longer periods of time. When the baby-boom generation retires, the number of people collecting bigger benefits for longer periods of time skyrockets, and the system collapses.

Or you keep raising ss taxes and raising the retirement age to keep the pyramid scheme going.

Or you start doing something NOW to address the problems.

Compare Chile's system with France and Germany.

It's just not that complicated, folks!


At 1:59 AM, Anonymous Jammy said...

Hi there...realized that somebody had come to my website...from your blog..and thought wud check you out. Nice site...and that bit about the French & Irish...was awesome. Just amazing....


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