General Question

jengray72's avatar

Will Social Security still be there for GenXers when we're ready to retire?

Asked by jengray72 (143points) April 14th, 2011

I went to a Social Security seminar yesterday, and the advisor was very happy to tell us that Baby Boomers have nothing to worry about. Well, half the room was 10–20 years younger than the “boomers” she referenced, including myself. She seemed generally optimistic, though, and I wonder if there will be anything left to pay out when I reach retirement age?

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46 Answers

tedd's avatar

One of the biggest misnomers of the SS debate today is that it is going to “run out” of money. The estimates that put SS as reaching insolvency in X years…. insolvency means reaching the point where it can no longer pay you $1 out for every $1 you put in. When we reach insolvency it will instead give you $0.99 for ever $1 you put in, and then gradually less as time goes on.

The debate also seems to largely ignore that SS has been majorly reformed at least half a dozen times to avoid reaching insolvency, as the average life span in America has gone up and driven the # of people receiving SS up. Everytime they redesign it to last even longer, but of course no one model will work forever, it will just need to be reworked again some day.

mrlaconic's avatar

Who are you defining as Gen X?

Gen X, is the generation born after World War II starting between the 1960s and ‘70s, ending in the late 1970s to early ‘80s, those people I think will be safe.

Gen Y (82 – through late 90’) and Gen Z (Late 90’s to current) people who are not even working yet or have just started working and are working their very first job may have something more of a concern.

CaptainHarley's avatar

No, it will not.

Not unless we decide to put it in a separate account where idiot representatives senators can’t get at it to use in buying votes.

tinyfaery's avatar

I’m not counting on it and neither should you.

JLeslie's avatar

In my opinion yes, it will be there.

wundayatta's avatar

Social Security will be there. Whether it will pay out the same benefits as people currently receive is the main question. It will not run out of money, but it may run short of the money it needs to meet its obligations.

If your expenses are more than your income, you need to cut expenses or raise income. The country could reduce benefits, say by making folks wait longer to become eligible for benefits. Or it could increase the Social Security tax, which, if raised enough, would also balance the books. Which do you think will happen? Yes, Americans love to cut taxes because they never see the connection between taxes and government services. When it is a matter of their own personal income (i.e., social security payments), they might find it more to their interest to raise taxes…. on others.

There is a lot of fear mongering out there. I’m not going to say by who (republicans), but it does not serve the discussion in any useful way. People hear sound bites and then they have to ask questions like this, and then they have to hear a lot of malarkey about not getting any social security payments. Even sensible people say this.

jaytkay's avatar

Social Security is not in any danger of collapsing on its own. It needs some tweaking after 2037, but as @tedd explains above, that is not a big deal.

However, there has been a long-time effort on the part of Republicans to destroy it, and they have been working very hard for decades misinforming the public about it’s imminent demise.

casheroo's avatar

I honestly don’t know but I’m not going to view it as a major source of income at all. I want to save as if there will be no SS.
btw, who was that republican who said abortions were the cause of us not having money to pay for the people getting SS? he implied that we need more workers but abortion was the cause of less workers lol

marinelife's avatar

You need to prepare for your retirement as if it was not going to be there. I think there will be some benefits for your generation.

gondwanalon's avatar

In these uncertain and troubled times it is best that you plan for Social Security to NOT be there for you when you retire.

As you likely know your have options such as Roth or traditional IRA’s and other personal investments in the stock market. If your company has a 401k or a 403b then definitely take full advantage of it.

I’m a baby boomer who will be eligible to start collecting SS in a couple years. I’ve planned well for retirement and I simply don’t need SS. I’m not counting on collecting a dime of it and if I do I realize that the payments could stop at any time.

Take charge of and responsibility for your own retirement because no one can tell what the future will bring,

Good luck!

CaptainHarley's avatar


Since we have passed 3 million abortions some time back, he could be on to something. But the true reason why SS is in trouble is because politicians of BOTH major parties used it as a cash cow for decades!

seekingwolf's avatar

I’m not counting on it.

I’m 21 and I’m pretty sure that if I relied on the government to help “take care of me” in my old age, I’d probably be placed in the lowest of nursing homes and left to rot while my property is confiscated because I wasn’t able to pay my bills – no SS money!

As soon as I start my career, I’m saving up for my retirement. That would take precedence over anything else, honestly. You can’t even have kids and rely on them to care for you. You need to do it yourself by saving up the money appropriately and then spending it wisely. I’m going to make sure that my future husband and I will be able to live a decent quality of life…not relying on the govt funds.

plethora's avatar

@seekingwolf You are a very wise woman. Start just as soon as you possibly can.

@tedd Stop living in a liberal dream world. There is no relationship whatsoever between what you put in and what is paid out to you. Nor is there any such thing as a SS trust fund, except in name only and not in any realistic accounting sense. For those now under 55, SS may keep its name but it will be a very different animal and a much more limited provider of retirement funds.

tedd's avatar

@plethora This isn’t some liberal dream world, its reality. SS calculates itself to pay you back every single dollar you paid into it (fixed for inflation), based on the requisite “retirement” age (even if you keep working) to the end of your life expectancy. Obviously this doesn’t always work out even, people die early, live long, etc. But that is what its set up to do.

And actually, the Social Security department is pretty much the only government department to have a huge surplus of money in its stores, and is one of the largest owners of Treasury Bonds (more than most countries even). Conservatives have been preaching since its inception in the 1930’s that Social Security is flawed and is on its way to being broke in just a matter of years!!! .... Well its been about 80 years now and its the second most popular government department (behind the military) and the only one that doesn’t have a budget shortfall right now or for the next ten years . You never hear about Social Security needing to cut billions of dollars from its tab right now, or next year, or even in a few years….. because it has the money.

Maybe you should stop living in a conservative nightmare world where everything is doom and gloom when the Dems are in control?

I’m not saying you should count on Social Security to live off of when you retire. Thats not what it was meant to do. It was meant to make it so you could afford to live at all if you were unfortunate enough to not build a nest egg for whatever reason. Better to have you living off food stamps and poverty level income from SS…. than the backs of your family, a government institution, or just plain dying.

YARNLADY's avatar

None of us has a crystal ball to see into the future. However, if you are truly concerned with your future in Social Security, please take an active role in your government. Find out how Social Security works, which government representatives are most active in the role you would choose for your future, and what you, personally, can do to see that it works.

Too many people see the government as some kind of unfathomable entity that has nothing to do with them, and that is wrong. WE are the government, and the more people that take that as a fact, the better.

ETpro's avatar

It certainly can be if we are willing to actual;ly pay for it. But is we insist on believing the Santa Claus fantasy that so long as the government just gives money in the form of constant, everlasting tax cust mostly for the affluent and downright rich, it’s free. If we swallow the obvious lie that all tax cuts always raise revenues, then no, social security won’t be there. Bridges and roads that you can actually drive on won’t be there. Public education won’t be there. Nothing will be there. The country will fall to third-world status and the rich will just move on.

seekingwolf's avatar


Thanks. I have one year left of college and then I’m anticipating going to PA school. So I should start working within 2–3 years after entering PA school and making money. I definitely want to save up ASAP. I’ll probably talk with some financial adviser and see if I can put money away in 2 different savings for 2 different uses: 1 for a house someday and the other for retirement.

The geriatric population is the LARGEST growing segment of our population. That means right now, we are having a ton of people age. It’s going to be a crisis for the healthcare system as well as SS. Anyone who thinks that they can rely on SS dollar for dollar in the future needs a reality check. We aren’t going to be able to provide SS for the elderly in the future. It just won’t happen.

I figure – may as well prepare. It’s sink or swim. I know many people who are going to “sink” but I don’t want it to be me. I don’t want to end up without help, alone, and unable to provide for living costs. Government isn’t going to do a thing because they can’t. They spend the SS money on other things and we aren’t going to get that money back. So don’t count on it.

plethora's avatar

According to the Office of Management and Budget under the Clinton Administration in 1999, “The Social Security Trust Fund balances are available to finance future benefits and other trust fund expenditures but only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

Nor is the SS system one of the largest holders of US Treasury Bonds. The bonds that the SS system holds, while called Treasury Bonds, are actually the assets referenced above, special “bonds” which do not represent real economic assets, but are rather claims on the government which will have to be funded as noted above.

This is reality in regard to Social Security.

bkcunningham's avatar

That is correct @plethora. There is no Social Security Trust Fund as a real investment, an insurance fund, a pension nor a retirement fund. Congress must make appropriations for Social Security each and every year.

2011 is the first time since the Social Security program started in 1935 that payments to beneficiaries exceed the tax from taxpayers. Some $45 billion more will be paid this year to recipients than money collected from taxpayers. We will be borrowing the money from China as new debt.

ETpro's avatar

@bkcunningham & @plethora There are a ton of investors who would disagree with you. Insurance companies are among them. Many hold US Treasury Bonds, which is exactly what the Social Security Administration holds in the amount of $4 trillion dollars.Unless the Greedy Oligarch Party engineers a default on the US debt, they represent the full faith and credit of the US government.

America is far from broke. We as a nation have a gross domestic product (GDP) of over $15 trillion a year and growing. Our debt is less than 100% of GDP. At worst, right after WWII, it hit 120% of GDP and we paid that down. If our current debt makes us broke, then consider these facts.

Nearly every homeowner who finances a home mortgage is bankrupt. Their mortgage is FAR greater than their annual earnings, so their debt is far greater than 100% of their GDP.. Every kid who finances an education as a doctor is stupid and broke. They graduate with debt in excess of their starting salary. Investing in the future is bad, in GOP fantasy land. The top 1% only have 40% of the nation’s wealth. We can’t transfer the remaining 60% from the bottom 99% of us to them while investing in something as stupid as the future. We have to just let seniors die in the cold streets and the poor starve and go without educations, because the top 1% needs that 28% tax cut the Greedy Oligarch Party is proposing for them. And they will need another tax cut next year, and another, and another. We’ve only been cutting taxes for the rich for 40 years now. It’s going to produce great prosperity. Just give it time. If the medicine seems to be making you sicker and sicker, just keep upping the does.

tedd's avatar

@ETpro Not to mention the US government has $77 trillion in assets.

If we really needed to pay back all our debt we’d find a way.

(side note, our debt actually peaked at around 150% of GDP after WW2 and after the Civil War)

ETpro's avatar

@tedd Excel;lent points.

@jengray72 While I may argue with the gloomy picture that @plethora & @bkcunningham paint, and while I maintain the ugly future they envision doesn’t have to come to pass, I would be remiss if I didn’t warn you that, as much as possible, we should always hope for the best but plan for the worst. If the GOP has their way, or if the world slides into another great depression (something that is s*sure to happen* if we suddenly slash $1.6 trillion in spending) then only those who have savings in safe investments will be able to do well. I would avoid those investments that failed suring the last great depression. Those who had all their money in banks or stocks were wiped out when the market crashed and banks failed all around the world.

jaytkay's avatar

@plethora I have some bad news for you. If you have a bank account, the bank does not have your money! They loaned out your money to other people. Your account balance exists only “in a bookkeeping sense”.

I am not making this up! If that kind of thing worries you, you should rush down to your bank immediately and raise a ruckus.

plethora's avatar

@jaytkay Lets deal with apples and apples. The moment you deposit money in a bank, you do not have the money. But you do have a legal claim against the banks assets as well as the FDIC. All money placed in a bank is invested in legitimate investments, including loans and US Treasury notes and bonds, and you still have your legal claim against the banks assets.

plethora's avatar

@ETPro ”Many hold US Treasury Bonds, which is exactly what the Social Security Administration holds in the amount of $4 trillion dollars.

According to the Office of Management and Budget under the Clinton Administration in 1999, “The Social Security Trust Fund balances are available to finance future benefits and other trust fund expenditures but only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

If you dont know the diff, get a book on bonds.

ETpro's avatar

@plethora That is exactly how your vaunted bank deposit works as well. That is how it has worked since the 16th century. Read up on Fractional Reserve Banking instead of defending yourself by telling me to read what I already understand.

plethora's avatar

@ETpro And to which type of bond referenced in my post are you referring?

ETpro's avatar

@plethora US Treasury Bonds.

plethora's avatar

@ETPro I referenced US Treasury Bonds to make the distinction between the “real” bond, which is traded daily on bond markets around the world, and the “US Treasury Bond” held by the Social Security “trust fund” which holds no real assets, is not traded, and cannot be redeemed for cash. That type of “bond” is merely an IOU and can be redeemed for nothing unless Congress appropriates the funds to fulfill its promise.

Bank deposits work like neither.

ETpro's avatar

@plethora I am sorry that it took me some time to research the difference in bonds held by the Social Security Administration and those sold to public investors. But the final analysis is that they were originally set up as separate bonds to keep the assets accrued separate from the general fund that typical Treasury Bond sales are poured into. This was set up through a bipartisan effort between President Reagan and Tip O’Neill in 1983. They had realized that they were facing a demographic disaster in the future when the boomers started retiring. We would transition from a situation where 3 workers were paying in for every 1 retiree to one where 2 current workers might be supporting 3 retirees. Clearly, under those demographics, retirement benefits could not be maintained simply by transferring funds from current workers to retirees, as Social Security had been originally been set up to do. They mutually agreed to raise the FICA withholding tax a modest amount and set up a trust fund of special Treasury Bonds to hold and grow the revenues brought in by the tax. That reserve would pay out to boomers as they retired in record numbers.

Social Security and what’s wrong with it today is a complex issue, and thus one subject to easy demagoguery and obfuscation by politicians itching to get their hands on the funds it accrues, or to channel them to cronies on Wall Street who will handsomely repay a multi-trillion dollar “favor”.

I found an article Paul Krugman wrote in a column dated July 25, 2001. He was commenting on the blatant lies that the bipartisan commission set up by George W. Bush cranked out to support Bush’s privatization efforts. Paul Krugman’s simple logic does a great job of laying bare the lie that the Social Security Trust Find’s assets aren’t real money.

Krugman wrote “You began saving for your retirement 18 [now 28] years ago. You could have bought stocks and corporate bonds, but your nephew persuaded you to keep it in the family. So ever since, you have been lending him money. Your contributions helped him through some bad financial patches, and recently he used money he borrowed from you to pay off his mortgage.”

“But now he tells you that you had better start investing for your retirement. ‘After all,’ he says, ‘you don’t have any real assets.’ ‘What about the money you owe me?’ you ask. ‘That’s not real assets.’ He replies. ‘It’;s just a promise. The only way I could honor that promise is by earning more or spending less money on myself.’ Meanwhile, you happen to know that he has ordered himself a yacht—and that the payments on that yacht would be enough to cover the debt he owes you.”

That is exactly the sophistry being employed by politicians trying to tell us that suddenly, the trillions we have contributed to Social Security are not real money. Oops, we bought the wrong kind of Treasury Bond. Damn, and here we thought those were real money bonds when we gave up our real money to buy them. Sorry, @plethora, but that’s a lame excuse and I am not buying it. The Social Security Trust Fund Bonds represent the full faith and credit of the US government just exactly as any other Treasury Bond does. To default on them because we elected to buy a yacht for ourselves is unconscionable.

And if you privatize Social Security now, that means that no future worker funds will flow into the system. Maybe those who retire 50 years from now will do fine with private investment funds. Maybe not. Nobody without a 50-year crystal ball could say. But those who retire before then will get royally screwed. They will retire with ZERO workers contributing to their retirement, and be told that the money they paid in for most of their adult lives wasn’t real money—because greedy politicians looted it and now deny it ever even existed to loot.

plethora's avatar

@ETpro Suit yourself. It’s a pay as you go system. SS taxes collected this month pay the benefits for next month. Screwing up SS has always been a bipartisan effort throughout all the years since 1935. You are welcome to think there are assets in trust which will pay benefits. If you live long enough, you will see the error of your thinking.

ETpro's avatar

@plethora Not so. Revenues still exceed outflows and will till about 2016. We raised the withholding in 1983 to store up cash reserves for that day. The amount was sufficient to carry the system straight through till 2040 when it could go back to a pay-as-you-go system. But our greedy nephew (politicians AND voters) decided to pay down the national debt and provide ourselves tax cuts with the money we’d promised for the boomer generation’s retirees. It is exactly like Krugman’s example of the greedy nephew paying off his own mortgage, thus saving himself interest, then claiming the money he used to do that wasn’t real money.

The money was collected. It was real money when we paid it as taxes. It was used to buy a special class of US Treasury Bonds. Whether politicians blew through the trust fund or not, the bonds represent the full faith and credit of the US Government. If we refuse to honor them now because it’s inconvenient, then the US is defaulting on its debt, pure and simple.

plethora's avatar

@ETpro The bonds are good only if the govt appropriates funds to honor them. These particular “bonds” have no value unless funded by raising taxes or some other method.

ETpro's avatar

@plethora That is what we must do to redeemr ALL Treasury Bonds. That is what corporations do to redeem Corporate Bonds. That’s just called paying your debts. To default on them is called being a deadbeat. Are we so hungry for perpetual tax cuts for the wealthy that we’re willing to default on the US debt? If tax cuts for the rich really always increased revenues, then no problem. Just cut taxes enough, and the money would magically appear in the treasury.

We got into this mess because people believe in on or another kind of Santa. One Santa gives you free shinny new government programs that cost nothing. The other Santa gives checks for Christmas that magically appear in your bank account AND the Treasury at the same time. Some people even believe in both Santas. But the sad fact is that there is no Santa Claus. The old Mexican proverb is right. “Take whatever you want in the world,” says the Lord, “and pay for it.” Now it’s time to pay for it.

plethora's avatar

@ETpro That is what we must do to redeemr ALL Treasury Bonds. That is what corporations do to redeem Corporate Bonds.

Sorry, but you are incorrect. A corporation must maintain assets many times in excess of its debt (bond debt included) in order to even be able to borrow. Payment of the debt is not dependent on some special cash raising exercise. If it did, their bonds would be declared worthless on the bond market and someone would force them into bankruptcy proceedings.

All US Treasury bonds (except for these special bonds issued for medicare, medicaid, and SS) are secured by the full faith and credit of the US Government, meaning that the total assets of the US Govt are sufficient to pay off the bonds when they come due. Of course, what the govt actually does is just issue more bonds to pay off the old bonds when they come due.

However, the special bonds of which we speak, are not secured by the full faith and credit of the US Government. They are secured only by the ability of the government to raise cash when they come due, presumably by raising taxes or possibly by issuing more bonds to take their place.

ETpro's avatar

@plethora You are twisting and spinning to make two perfectly equal things completely different. You said that what the government does to redeem its bonds is issue more. That is so that it maintains the full faith and credit concept. It must do the same for the Social Security bonds. Defaulting on them would be the same as defaulting on any other obligation the government has.

The Bush tax cuts stripped $170 billion a year out of US revenue.Bush said that was a modest amount. The demand on treasury funds when boomers retire in waves will be about $180 billion a year. Bush said that was an unimmaginable amount that we couldn’t possibly afford. Like your full-faith here and not-real-money there, more doublethink to come up with the justifications for stiffing seniors so the rich can get yet another tax cut. Funny how we can easily afford the one, but the other is impossibly expensive.

And as to assets, the US government has assets of at least $77 trillion. We are certainly as well off as most corporations issuing bonds.

plethora's avatar

@ETpro Forget your damn politics. This is a non-partisan issue, a technical question. Once again, from my post above

The bonds are good only if the govt appropriates funds to honor them. These particular “bonds” have no value unless funded by raising taxes or some other method.

End of story…like it or not. STFU

ETpro's avatar

@plethora Once again, no US Treasure Bonds are any good if the US refuses to honor them. There is no functional difference except for politics sake. Republicans hated Social Security from the day it was passed, and they are determined to define it as bankrupt so they can privatize it and fatten the pockets of Wall Street with taxpayer subsidies.

Had I had a vote in the matter back when Social Security was established, I might well have voted to put about half of the funds into Stocks and Corporate Bonds that appeared safe. The return over a career would probably be great enough to weather anything short of a total depression. But it is what it is today. Privatizing it now would mean that several generations of future retirees would either have to go without any benefiots, or taxpayers would have to dig deep into their pockets to fund the transfer of systems. I am not in favor of any policy that advocates either of those.

The fact of the matter is we voters, through our decisions, elected to give the retirees money to ourselves now in the form of tax cuts. When it comes time to honor those Bonds, we will have to reverse that policy and honor them, or the US government will be in default and its debt will be worthless on world markets.

plethora's avatar

@ETpro I have become so confused by your political rhetoric that I have no idea whether you understand that there is a difference between a US Treasury bond traded on the open market and the US Treasury bond held in the SS “trust fund”. How about just a one word answer..Yes or No…thanks

ETpro's avatar

@plethora No, There is no difference in what backs either type. It is the full faith and credit of the US government and nothing else. Here is how they work.

plethora's avatar

@ETpro Sorry….my quote above repeated here.

“According to the Office of Management and Budget under the Clinton Administration in 1999, “The Social Security Trust Fund balances are available to finance future benefits and other trust fund expenditures but only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

ETpro's avatar

@plethora I understand that perfectly. Do you seriously think that regular treasury bonds are different—that the fuinds raised by sale of those are not used to finance government day by day? Sale of Treasury Bonds (the regular kind investors buy) is how the US raises money to spend on running the day-to-day operations of the government. Like the bonds that the Social Security Trust Fund owns, their value lies in the full faith and credit of the US Government. Neither kind of bonds represent funds that exist in anything other than a bookkeeping sense.

plethora's avatar

@ETpro I think we have a semantics issue here. Your comment above is correct. The federal govt does sell bonds to run the day-to-day operations of the govt. But those bonds do have a negotiable value and are bought and sold in the bond market every day. Not so with the bonds used to fund SS. Those bonds, to my knowledge, are not traded, but are secured by the full faith and credit of the US Govt. The difference is that taxes can be raised and benefits reduced specifically to fund these bonds, as opposed to selling more bonds. Think, raising the level of earnings subject to the SS “voluntary contribution” to 100% of earnings. Think, cutting benefits by 25%.

I am not disagreeing with you here. Just noting the specific difference between the two types of bonds. In the grand scheme of things, it all comes out of the taxpayers pocket one way or the other.

ETpro's avatar

@plethora Yes, I believe we are getting down to cases now about how the two debt obligations differ. You are right that the bonds held by the Social Security Administration are not traded on the free market. I explained why. My explanation of why is true. Bill Clinton lied. He did not balance the budget, he raided the trust fund.

But be that as it may, here we are. Neither type of bond has any real value. They both stand, as does the dollar, on the full faith and credit of the US Covernment. If we default on the bonds held by the Social Security Trust Fund, what sort of message will that send to international bond markets? The US is willing to default on its own citizens. Should that tell Japan, and China and Germany that we will be good to our word to them?

Republicans may hate Social Security and Clinton’s duplicity may have helped arm them to destroy it, but we need to think not with our guts but our heads. If we default on debt to our own citizens, there is no faith and credit for the USA. We are not broke, and we don’t need to shoot ourselves in the foot trying to escape poverty.

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