Another Chilling Look at the Future of Social Security - Wolf Street
The solvency problem facing our Social Security System is a generally acknowledged fact, as supported by the program’s Trustees in their most recent Annual Report to Congress. Actually, if you go back in history, you’ll see that the problem has been repeatedly cited for many years. Via this website, we’ve provided many different perspectives on Social Security’s problems and proposed solutions, most recently offering commentary on the “Social Security 2100: A Sacred Trust” (S. 3071/H.R. 5723) bills introduced in Congress late last month. Virtually all reports are focused on the 2033 depletion projection for Social Security’s Trust Fund reserves, providing suggestions for extending that timeline into the future and repelling the dire consequences.
So, while much is known about the problem, and while there is much conjecture about ways to deal with it, today’s headline post takes a look at the statistical side of the forces systematically unraveling Social Security. Pundit Wolf Richter, in a post on his site wolfstreet.com, takes a detailed look at how we got to where we are with respect to the OASI Trust Fund. His analysis covers the history of interest rates on the Trust Fund’s invested reserves, as well as the changing workforce demographics and how they influence the inflow and outflow of funds used to pay benefits. Calling it the “vicious dog,” Richter assesses the insidious effect of inflation on the value of benefits paid to retirees, summing that point up with this comment: “The gap between actual increases in costs of living and the COLAs for each year causes Social Security benefits to lose a significant part of their purchasing power over the years.”
Richter concludes with observations on the “adjustments” likely to happen in the future as the clock winds down on Trust Fund depletion, including the potential for a change in the cost-of-living adjustment calculation logic, and wraps up his analysis with this statement: “Social Security was never intended to provide adequate retirement on its own, and it’s not going to.” Overall, an interesting analysis of the statistical side of the Social Security dilemma…check it out here.