Podcast interview provides a well reasoned look into the future of Social Security.
My son just finished taking an Economics course at the University of Pittsburgh. He is now, of course, a subject matter expert on all financial matters. He has apparently been convinced by his professor that Social Security is doomed, and that his generation is being used by the baby boomers to fund rich retirement benefits, while Gen Xers and Millennials will be left to starve in their old age.
This is a widely held belief among almost everyone I discuss the topic with, including most of my financial planning clients. The belief is shared by baby boomers and millennials alike (although baby boomers are somewhat more confident that they may "get theirs" before the system blows up!) But the idea is based on several false assumptions, chief among them being that once the Social Security Trust Fund is depleted, the system will be "bankrupt" and Social Security will cease to exist.
I just listened to a great podcast with the author of a book on the subject of how to fix the Social Security system. Like his prescriptions or not, his analysis is largely on the money, and is worthy of a listen. I will admit I object to his characterisation of a tax increase from 6.2% to 7.5% as a 1.3% increase in taxes. Although this is how politicians like to present taxes, it is completely misleading. Any 7th grade math student could tell you that an increase from 6.2 to 7.5 is (roughly) a 20% increase, not a 1.3% increase! So other than calling him out on some misleading math, the rest of the analysis is sound, and worthy of a listen, even if it is a little long.
Click here to listen to the podcast.