Clark recently saw a political cartoon in The San Diego Union Tribune that really encapsulated the Social Security dilemma in a nutshell.
The drawing depicted three people: A young girl, aged 10, who still believes in the Easter Bunny. A young boy, aged 11, who still believes in Santa Claus. And 42-year-old Dwayne who still believes in Social Security!
The inspiration for the cartoon is fairly transparent. 2010 marks the first year that Social Security is paying out more to recipients than what’s being collected in payroll taxes from employees and employers.
Does this mean seniors won’t be getting their monthly checks? No, not yet. But that may be the case down the road.
Social Security went through a crisis like this a generation ago. At that time, the two parties sat down and worked out a compromise (that was back when they spoke to each other!) where the retirement age was delayed and taxes were raised.
All in an effort to kick the can down road…until now!
The benefits promised can not be met in the future. Clark is at fault because he was born in 1955 — the year that’s right in the middle of the baby boom generation (1946-1964). This group is a demographic time-bomb that’s blowing Social Security to smithereens.
So Dwayne had better learn to save! This is one problem we can’t tax our way out of; we can only reduce benefits.
Notice that Clark isn’t saying Social Security will go away completely. It won’t. But the retirement age must be pushed later and benefits paid out must be smaller relative to living costs.
If you were born after 1964, it’s your problem to figure out how to pay for your retirement. Now is the time to start saving! Don’t be like Dwayne.