We have to admit that we are just living too long, plus the insurance company profit driven health care system we have is driving us into bankrupcy.
William Chirolas -- World News Trust
May 18, 2009 -- The Social Security Trust Fund Report for 2009 has been released ( http://ssa.gov/OACT/TRSUM/index.html ) and longer life spans are causing the SS Trust Fund (a $2.4 trillion surplus paid into Social Security over 20 years that Uncle Sam has borrowed, spent and promised to pay back via issuing the same dent instrument -- government bonds -- that we give China when we borrow from them to finance our deficit) depletion by 2037 -- four years earlier than last year.
In addition to the greater life span assumption, the other reason for the decrease in years to fund depletion is the decrease in payroll taxes due to the Obama "stimulus" package reduction in those taxes, plus the reduction in payroll taxes collected due to smaller payrolls caused by the growing unemployment (Since Jan. 1, 2008, 5.7 million payroll tax jobs have disappeared, with lower wage part-time jobs hitting another 4.3 million persons).
We have to admit that we are just living too long, plus the insurance company profit driven health care system we have is driving us into bankrupcy. An increase in the Retirement age from Reagan's age 67 "normal retirement age" that is now in the current law to an age 70 "normal retirement age now appears to be a must -- we are just living too long.
It will be phased in as was the Reagan change over many years so as to be at age 70 by 2045, and the result will be early retirees taking their first check at age 62 after the phase in starts 15 or 20 years from now will retire more years early -- making for a larger reduction from the "full benefit" at normal retirement level. Medicare is a disaster (Trust Fund gone in six years) given the annual increases in health cost via the ins company system of 6+ percent annual cost increases in an economy that grows 2.5 percent -- soon health will be more than 100 percent of the total economy -- an obvious impossible mathematical result -- but one we walk toward year after year so as to preserve the ins company right to a profit.
Beginning in 2016 the government will no longer be able to borrow from Social Security to hide the operating deficit -- and indeed it will have to come up with borrowings from others to get the cash to redeem some of the bonds held by the Social Security Trust Fund -- redemptions the Trust fund will need to make to cover part of the benefits paid that year.
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William Chirolas brings 40 years of real-world business experience in local, state, national, and international tax, pensions, and finance to the world of blogging. A graduate of MIT, he calls the Boston area home, except when visiting kids and grandkids.
