We Can Always Return to the Iceberg Strategy

Social Security

Recently I read an article by Anya Kamenetz, if that is not a Northern European name what is, on the looming Social Security disaster. She mentions:

The shaky economics of the program became apparent with the first beneficiary; a legal secretary from Vermont named Ida Mae Fuller. From the age 63 to 65, Fuller paid 1% of her income into the system --- a total of $24.75. She lived to be 100 years old and collected a grand total of $22,888.92 in benefits. In other words Ida made a 100,000% return on her social security investment. According to the Congressional Budget Office, Americans born between 1876 and 1937 will receive a total of $8.1 trillion more from the social security system than they paid into it.

In 1972 social security was tied to the growth in wages COLA, Cost of Living Adjustment. When wages go up benefits go up, not allowing reserves to build up.

She continues:

Alan Greenspan designed a bailout plan that raised payroll taxes, cut benefits, shifted the retirement age from 65 to 67, and taxed social security benefits of the rich. Signed into law by President Reagan in 1983, the Greenspan package worked. Social security began to run up a sizable surplus. … according to the plan, the surplus went into a “trust fund’ to help pay for the retirement of future generations.

… During the 2000 presidential campaign George W Bush and Al Gore promised repeatedly to stop “raiding the trust fund.”

Nevertheless, … Bush used the social security surplus to cover government expenses. By early 2007, the Bush administration had spent $1 trillion of social security money at the rate or $500 million per day.

In October 2007, a New Jersey school teacher named Kathleen Casey-Kirschling retired and became the first of the 80 million Baby Boomers to file for social security benefits. Right now there are about 3.4 workers paying into social security for every one retiree. But as the Baby Boomers leave the workforce, that will change. By 2030, there will be 2.2 workers per retiree. In other words the system won’t be able to sustain itself, and the pyramid will start to tip over. … In previous eras, old age and poverty went hand in hand. But in postwar America it is rare. … Today less than 10% of the elderly live below the poverty line. Without social security it would be 40%.

We can always learn from history. In the 1800s Alaskan Inuit set their grandparents adrift on icebergs and wave goodbye. We should hurry before Global Warming wipes out our retirement options….