The complicated aspect about the Social Security system in the United States is that it was falsely marketed.
It's called an "entitlement" because people pay into it and are supposed to get it back like a pension, regardless of whether they are rich or poor when they retire. And so the Baby Boomer generation views any cuts to their social security as a rugpull, basically. It's not insurance or charity; it's an entitlement.
However, although it was marketed as like an entitlement/pension, that's not how the math worked out in practice. And it's because population growth is slowing. It was based on ponzi math, assuming that every generation will be bigger than the one that came before it. But the Baby Boomer generation was huge.
In addition, when Social Security was created, the retirement age was set near the average life expectancy. Many people would not live long enough to collect it, and most would collect it for a handful of years. Only a small minority of outliers would work for like 40 years and then live off social security for like 20+ years. But then over the decades, life expectancy increased by like 15 years, so the default assumption is indeed that someone can work for 40 years and then have 20+ years of retirement, even though the amount they pay into it doesn't really mathematically cover that. It's not designed for that en masse.
And so Baby Boomers had like a 3.5 worker-to-retiree ratio to support in their peak earnings years, while Millennials will have more like a 2.5 worker-to-retiree ratio or less to deal with. Which means they get a worse deal. Many Millennials don't even think they'll get it at all, despite paying into it.
That breaks up the social contract and sets up inter-generational political conflict. "Fourth Turning" stuff.
It's a big reason why "defined benefit" plans are inherently unstable; they rely on being able to predict the future.
And it's also a big reason why, when speaking about deficits, nothing stops this train.
Or congress just cuts entiitlements
Good luck. That’s where their votes come from.
I'd like to hear one politician (or political commentator) offer one suggestion for what to do. But no one has one, so catastrophic collapse seems like the only outcome.
The system needs review and a reasonable discussion of potential adjustments. No politician is willing to engage on the topic due to potential impacts on their reelection chances. More aggressive ideas like allowing a portion to be privately invested (in bitcoin?) have even less chance of progressing. So, the default answer is “do nothing”.
Yeah, this is such a big and complicated issue. It's crazy how things have changed since Social Security was first set up. It’s like the system wasn’t built to handle all these shifts in population and life expectancy. I doubt there’s a way we can adapt to make sure everyone gets what they’ve worked for, without making it harder on the next generation. If there was a way I imaging a rough draft would have been proposed by now… oh well…Keep stacking I guess.
An easy way to ensure everyone gets their share is to make it an opt in system.
I think most things should be an opt in system.
Australia transitioned away from defined benefit schemes in the eighties and early nineties, and has increased retirement age (not a legal concept here, but when you can access a pension or your benefits) has been increasing too, from 55 when I was young to 67 currently.
I'm not a huge fan of the resulting system in its details, but it's a sign that people and politicians used to care about longer-term thinking. (Interestingly, these reforms were from the Left, not Right, which maybe explains why they happened?).
You can’t stop human nature. Any one of us under the right conditions can turn to evil. No man is good, not one.
Australia has 2 schemes. The aged pension & superannuation. The pension is a welfare payment calculated based on your income & assets one you hit 67.
Superannuation is different in that it is your money held in trust until you reach preservation age (60 for most Australians). Each Australian employee is forced to pay 11% of their gross income into a superannuation fund.
The trouble with superannuation funds is that they are subject to the same aging demographic problem. Most funds invest in equities, CRE & bonds. As our population ages and consumes from these funds, the investments don't benefit from the forced saving as much. It becomes another ponzi only it's felt in declining superannuation "yields".
The saving grace in our system is that you can set up your own superannuation trust/fund & manage the investing yourself. My self managed fund is very heavily invested in Bitcoin which has performed quite well over the last 4 years. Currently none of the managed funds offer exposure to Bitcoin.
The fundamental difference is between defined benefit (pension scheme) and defined contribution (super). The latter *is* thought of as an entitlement, but the separate accounting makes that closer to the truth?
Ofc, poor overall economic performance will hurt super (in Australia, this means if property prices ever go down, we're screwed).
I suspect the govt will raid the outliers during some crisis ("who needs $10m of super?" they will cry) probably using exit taxation. This political risk from here to my retirement is significant, which is why I've never topped up mine. Agreed.
I've never contributed more than I was compelled to because of this. I was so disillusioned by the whole scheme that I set up a SMSF and dumped it into Bitcoin before I'd built up much conviction in Bitcoin. The biggest drawcard for me was being able to custody the asset. With hindsight, it worked out well for me.
They're already seeking to tax unrealised gains on superannuation balanced over $3m AUD (Division 296). That $3m figure is not even indexed to CPI, so you can imagine how many will be effected by it over the years.
In Italy we have a pretty communism forced contribution, and its because we, men of culture, are mostly criminal here. I will never give a fucking cent of my work to this ponzi scheme.
Bitcoin fixes this, but more people adopting bitcoin and contribution-evasion will make more likely the scenario you are expecting, so hope for their good that people stop acting retarded and stop financing the state with this other form of taxation basically.
The core of the problem is we have crooks running the government for the benefit of the 1%. If the money put into Social Security was professionally invested rather than plundered, it would be nearly self-supporting. Imagine if SSN started investing the money in BTC back in 2009.
We of Gen X would like to thank the Millennials and Gen Z for working to fund our pending SS benefits. Now stop farting around on NOSTR and get back to work.
Wait, social security in the US is linked to the Social Security Institute in there? Which document are the taxes put on?
We have the CPF/CNPJ(Brazil's EIN).
I never asked to be a part of this ponzi, and I’m certainly not counting on it.
And that’s the only reason it’s not technically a ponzi scheme. Because instead of being tricked into buying into it they use guns.
I didn’t give my kid a SSN, figured it’s his decision
Boomers are, on average, getting something like 13x what they paid in even when adjusting for inflation. Social contract is completely broken. They should at least be cut off at inflation adjusted contributions.
"SCREAMING!: SO AS AN 'EXPERT IN ECONOMICS', WHAT DO YOU SUGGEST AS A SOLUTION TO THE ISSUE YOU BRING UP?!"
opt out and just buy bitcoin!
Meh, I don't plan on paying for any gay social security crap.
All they need to do is buy #bitcoin with the inflows keeping outflows in fiat ..
I appreciate your mind / thoughtfulness / precision
Love me a good engineering-background #Bitcoin er
Maybe Social Security should have been marketed as an insurance policy or an additional tax?
It is a tax - check your paystubs/W2, split between the employer and employee. Its also a completely mismanaged POS.
Give millennials the option to opt out and just pay for boomers retirement by hyprinflating the currency. 5-10 years of hell but a clean slate. 🤷♂️
Social Security was opt-in since its beginning until Ronald Reagan, when the Democrats and Republicans made it mandatory.
Interesting. I don’t know the history of it.
agree. I’m paying into it but i dont count it into my retirement portfolio.
Had a boomer friemd tell me I owe him bc I'm "young". He's worth millions and I have nothing.
Terrible conundrum when something needs to be done but can’t be done at the same time
Excellent analysis... You can almost feel the unconscious expectations of decisions decades past... They just assume that it's supposed to be this way.
"And so Baby Boomers had like a 3.5 worker-to-retiree ratio to support in their peak earnings years, while Millennials will have more like a 2.5 worker-to-retiree ratio or less to deal with. " //
I certainly vividly remember how, in our later high school years, during the "Social Studies" class, we were presented with very similar formulas for the German social security system.
The math simply did not seem to check out.
It just didn't make sense "what the adults were trying to tell us".
It did not square.
When a few of us inquired about it, the teacher didn’t have any satisfying answers. (Well, duh—he’d been on the Ponzi train long enough to know that it would work out for *him* as long as a sufficient number of people kept paying into the system for the next 20-30 years.)
We were presented with all these rosy words and theories about how great Germany is because "everybody is taken care of."
But when you looked at the cold, hard numbers, it seemed evident that a cold, hard stop would follow - and that our generation would bear the brunt.
That specific day never got out of my head.
A severe seed of doubt had been planted.
I would even say if you count all ‘hidden’ unemployed (‘Buergergeld’) in, the ratio sucks even more already in Germany.
German pension scheme is only surviving with the help of money printing aka government debt.
Imagine southern Europe, way older society.
... way more money printing in southern Europe necessary.
Ponzi scheme dressed in a pension's clothing.
The Fourth Turning is here. Prepare for the impact.
nostr:nevent1qqs8ulsxaehnya8n0dsjysl8z3vv9luaz43m436kakyxkuaey3nta4cpzamhxue69uhkzarvv9ejumn0wd68ytnvv9hxgtczyr4tpe6k6v4cp0x5vneas39cqspsxp66z04tcdve5a3vntr6hy057qcyqqqqqqgd25vrz
#siamstr
In Switzerland, all citizens can vote on specific issues, and this year, pensions were a major topic, especially because everything has become more expensive due to inflation. We even voted to introduce a 13th monthly pension payment, although the financing for it has not yet been finalized. Since young people don't always vote and there are more older people, the older population is more likely to achieve a majority.
That means now everyone will receive more money for their pension
Where I’m from, when millennials mention they don’t expect to ever get any pension from their mandatory payemnts into the system, the older generations mostly agree that it doesn’t look great, but their answer is that we now have this extra gov-run fund where you can invest additional money into your own retirement with a tiny tax deduction incentive. And I ask if they have ever looked up their portfolio and they look at me funny when I say why would I pay into a fund that will buy local government and government-owned businesses’ bonds with this money and tell me it’s all taken care of. It’s a great plan to distribute government debt, but not a great retirement plan. That part hasn’t sunk in yet.
this is why I view my humble stacking of BTC as a future pension of sorts.
I can imagine the gov will keep jacking up the pension age anyway and the reality is most people are barley physically or mentality capable for 9-6 jobs past 55 and even then good luck getting a job (I'm talking avout normal people here , not doctors , programmers)
they will just print more pieces of paper and then they'll hand them to the old people
old people vote
30 years ago I thought it was insolving and I really didn't think I was ever going to get any but now I'm 60 I think I might get a little bit
they will means test it. tax it .AMT it
it won't be enough
eventually it will fail somehow probably through too much inflation
The worst part about this is kaeeping the forced payments. I mean, one could see how they miscalculated, but preventing millenials from saving like this is almost evil, and certainly selfish behaviour
As a millennial, I say it’s time to rugpull the boomers. Maybe they can just cut back on the Starbucks.
Suggesting a rug pull on ANYONE for ANY reason isn't right...it's selfish-- "I should be entitled to this, and this other person isn't"
Dishonest
As a millennial. I have decided I won't see a state pension. It's a reason (amongst others) why I chose Bitcoin. And pay into a pension pot that I can control.
They implemented that in Germany after WW2. It simply doesn't work, but opting out is unnecessarily difficult or even impossible if you don't want to leave the country.
Best advice here is to forget about it and invest in your own retirement plan. Which is taxed and they have plans to charge you for social security on your earnings 😂
Yes, the system is screwed.
nostr:nevent1qqs8ulsxaehnya8n0dsjysl8z3vv9luaz43m436kakyxkuaey3nta4cpzpmhxue69uhk2tnwdaejumr0dshsyg82krn4d5etsz7dge8nmpztspqrqvr45yl2hs6enfmzexk84wglfupsgqqqqqqsdyvq7j
You've 100% missed the problem Lyn (sorry).
If the funds contributed to Social Security had been PROPERLY managed and invested, the system would work. It's simply actuarial math...and yes it should be adjusted periodically (again if it had been properly managed) but that's just part of the process. Any well-managed insurance plan does this every day.
Government is the problem, and government mismanagement is why Social Security is in trouble.
(Think of it this way - what if the Social Security funds were invested the same way Nancy Pelosi invested her own money...)
Exact same problem in Finland. It's a pyramid scheme.
Awesome write up.
nostr:nevent1qqs8ulsxaehnya8n0dsjysl8z3vv9luaz43m436kakyxkuaey3nta4cpr4mhxue69uhkummnw3ezucnfw33k76twv4ezuum0vd5kzmp0qgsw4v882mfjhq9u63j08kzyhqzqxqc8tgf740p4nxnk9jdv02u37ncrqsqqqqqphlpvm4
I am Gen x and I am positive I will not receive any SS. But who GAF! I created my own retirement.🤡🌎
It's the punchline. SMDH
nostr:nevent1qqs8ulsxaehnya8n0dsjysl8z3vv9luaz43m436kakyxkuaey3nta4cpr4mhxue69uhkummnw3ezucnfw33k76twv4ezuum0vd5kzmp0qgsw4v882mfjhq9u63j08kzyhqzqxqc8tgf740p4nxnk9jdv02u37ncrqsqqqqqphlpvm4
The root problem here is that nowhere near enough young people vote.
If they did, they'd still be able to sway the vote enough to cut spending on the elderly. But because they mostly don't vote, they're going to get screwed.
Frankly, they collectively deserve to get screwed. Inaction has consequences.
nostr:nevent1qqs8ulsxaehnya8n0dsjysl8z3vv9luaz43m436kakyxkuaey3nta4cppemhxue69uhkummn9ekx7mp0qgsw4v882mfjhq9u63j08kzyhqzqxqc8tgf740p4nxnk9jdv02u37ncrqsqqqqqp6eta57
The changes to the costs and cola increases botched it. You can't 'pay into it' in 20-30 years ago tax amounts and collect in today's present value.
Insanely easy to grasp scam.
So keep raising the retirement age? Work yourself to the most unhealthy days of your lives.
Most people didn't used to live beyond the age where they were able to work. Now the majority do.
A potential solution is having a cultural shift away from debt fueled consumerism towards frugality and saving. Hopefully, this will be encouraged by the widespread adoption of Bitcoin and HODL mentality.
The other way is having a cultural expectation for children to take care of their aging parents, definitely not an easy sell in the West nowadays.
Either way, can't be fixed quickly nor easily.
Only a economic depression can do that.
Would appreciate your thoughts on real estate in the context of the value that the Baby Boomers will inevitably pass on to their kids.
While they may have deprived the younger generations of home-ownership and the future value of “entitlements,” bricks and mortar might be their most meaningful asset transfer. Is this just an 80 IQ take or is this actually an under-appreciated demographic shift that bears exploring?
Social security is a huge Cantillon scam. The govt and their fascist cronyies on wall st get your money today at full value and give it back to you as inflated , devalued money sometime in the future. They throw you some bones from interest and investment returns, but the big returns go to Wall St. Anyone relying on Social Security when they retire is screwed.
Saw a bunch of Millennials complaining about Boomers. If they could stop voting in Democrats and if someone other than a Uniparty Republican (Trump) could get us out of the war business, righting the social security ship could possibly become a reality? I have seen some opine that if we just taxed everyone including the billionaires15% with no deductions, we could balance the budget rather easily? If out of the war business, I assume that it would be even be easier? I have been living in Asia for the last 12 years enjoying a second career after 20+ years as a securities litigator. So to the millennials who are having a hard time (many are not), I would say try and figure a way (hard work) to get yourself employable, even some newly minted law graduates needed safe spaces. Now in Asia, I am no longer practicing but almost exclusively hire Asians instead of Western graduates. @LynAlden if you could tell us what would be needed to fund SS to allow for the Millennials to get their payout, it would be most appreciated. If you cannot see any solutions, please let me know. Maybe I will cede the argument to those who want to pull the rug on this Boomer.
Ok so hear me out...
Instead of requiring that employees pay into Social Security, the State requires that this amount be converted into bitcoin sent to a time-locked address that YOU hold the keys to, that is locked until whatever the "retirement age" was when you started employment. Different potential timelock per new employer. Each employer pays to a different address all derived from a single xpub.
If the State really cares about forcing people to save for retirement, this is a much more efficient model and you always hold the keys to your own saved money; no opportunity for it to be rehypothecated, redistributed, or spent by the State, and you get exactly what you were forced to save.
Note: Not an endorsement of State force.
sounds exactly like an endorsement of state force. what we need is separation of money and state.
Thank you for your service. GM! 🫡
Oddbean new post about login | logout 
