On August 14, 1935, President Roosevelt signed the Social Security Act into law, thereby creating a “safety net” for retirees who may not have saved enough to get by on their own after they stopped working. Unemployment was close to the all-time 1933 high of 24% in 1935, still at about 20%, with over 10 million unemployed.
At the time of the enactment, there were 37 workers paying in to the system for every retiree drawing out of it. Life expectancy was 61 years in 1935, so fewer people ever got to the point of collecting, and those that did collected for a much shorter time than they would today.
Today, there are only three workers paying in to the system for every retiree receiving benefits, and this number is expected to shrink even further going forward. The average life expectancy is now about 85, so many more people will collect Social Security and for much much longer.
Something’s got to give. The main problem, as we have seen most recently in the A.C.A. Repeal/Replace effort, is that once an entitlement is put in place, it is very, very hard indeed to take it away.
The apparent solutions to the new SSA math would be to extend the age of retirement so that there would be fewer retirees collecting for shorter periods, and also to institute further means tests for benefits. But it isn’t that simple.
The problem is compounded by pressures on corporate leadership to reduce all benefits to employees, which are the biggest drag on their profits, the poor job prospects for older workers in the digital age, the freedom of a poorly-regulated financial industry to siphon off large chunks of “retirement” savings in the form of fees, and the inevitable migration of jobs to cheaper labor markets.
I suppose all this is one of the main causes of younger people’s resentment against the Baby Boomer generation. Their view of it is the Boomers are selfish, entitled, and want to get paid now, while flipping off their kids and grand-kids who will have to fend for themselves. Again, it’s not that simple.
Speaking as a Boomer who paid in to this pyramid scheme for decades, I certainly do want to get paid now, and, yes, I feel entitled to it. If that makes me selfish in the bargain, then so be it.
I fully understand that when the revolution begins, they will be coming for me first. Keep your eye out for me on the bread line – I’ll be the one carrying the sign that says, “Will work for C.O.P.D. meds”.