We’re still in the early innings of the 2016 presidential race. Yet there’s already a lot of talk about Social Security. How we going to pay for it down the road?
The rich are not to blame
With our aging population, we’re facing a situation where we’re going from 9 active workers for every 1 Social Security recipient to a 2:1 ratio if the demographic estimations are right. That’s a stark contrast. How do you keep the promises with that new math?
The rich are being seen as both the villain and the solution. Both the GOP and Democrats want the rich to solve the math problem. But here’s the reality: There’s not enough coming in from the paychecks of the rich to deal with this demographic timebomb. And that’s even if you took every penny they earned and diverted it to Social Security!
Then there’s the issue that’s been raised about the rich getting unfair amounts of Social Security themselves. The Washington Post‘s Allen Sloan ran the numbers and found that in reality the typical wealthy person who gets Social Security benefits has paid in much more than what he or she will get back in benefits. Using himself as a test case, his research shows the ‘rich’ get back between 50 and 75 cents on every dollar they paid in.
So are the rich taking an unfair share? No, they are not. Sure, there are other issues that we deal with when it comes to income inequality in the US, but I’m only talking Social Security here.
A look at the cold truth
The other thing is Medicare. The average Medicare recipient gets $3 in benefits for every $1 they paid in over a working lifetime. So we have math for our 2 aging programs that just doesn’t add up.
That means we will have to make adjustments in how we handle Social Security and Medicare. The sooner we make them, the easier the transition will be, and the less it will hurt people. Because if the can just keeps getting kicked the road — a favorite Washington phrase — it becomes more painful with every step for an aging population. So looking for every answer from the ‘rich’ is taking time away from looking for serious solutions.
Here’s the cold truth: Either taxes will have to go higher to maintain the current level of benefits -or- the benefits are going to have be reduced -or- some combo of the two. There is no magic rabbit to pull out of a hat, no matter what the politicians like to say about government waste and inefficiency.
We have to take this on as a country or else we spend ourselves into oblivion. If you don’t like budget deficits, this is the No. 1 area we’ve got to grow up and face!