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Shocking because its coming from Marketwatch, but is nevertheless very well thought out, objective, fact-based and easy to understand. I wonder how an article this helpful made it past the Marketwatch editor.
As for the Trust fund being depleted in 2035: I would hope our politicians would address it, but am skeptical given the decades-long, bi-partisan dysfunction in D.C., that anything will be done, until the last minute.
I do expect that, worst-case, at the last minute, the then-Congress will authorize, and the then-POTUS will sign ,legislation which fully funds retiree benefits using additional US Treasury debt. Any cut in benefits at that time would result in a thorough housecleaning of any scalawags in office who permit benefits to be slashed.
Shocking because its coming from Marketwatch, but is nevertheless very well thought out, objective, fact-based and easy to understand. I wonder how an article this helpful made it past the Marketwatch editor.
I have to agree with Edmund all the way on this one. Damned good article- clear and concise. Definitely not in the Marketwatch tradition.
Allow me to offer a contrary perspective on several of the myths.
Myth 3: SS is going bankrupt. Let's ignore the fact that bankruptcy is a legal state (you're in bankruptcy court because of a filing or suit), and work with the vernacular sense - that SS is going "bust". That is, it is becoming insolvent, unable to meet its debts as they come due.
That is the path SS is on. It will become insolvent around 2035, per the column. To say this is not "bankruptcy" (i.e. going "bust") is to twist the understanding of "bust". When the issuer of a bond fails to pay 100 cents on the dollar, we say the bond has defaulted. It doesn't matter that it paid out 76 cents, it still defaulted.
Employees who have worked a whole month and at the end of that month are paid 24% less money than promised are getting stiffed by their employer. While they may agree to take less pay going forward in order to keep the company afloat, and to keep alive their hopes of getting that back pay (been there, done that), it's not accurate to say that the company is solvent. Or that they're not owed that back pay. A company may continue operating this way, but so do companies in Chapter 11 (that are literally, legally bankrupt).
This leads to Myth 6, that SS benefits are an earned right. Technically the article is correct. "Benefits can be ... stopped altogether at any time." But do we really want to go there?
In theory, SS is less secure than private pensions, which tend to be treated as legal obligations. Further, private pensions are insured (to certain limits) by an agency of the federal government (PBGC). Pragmatically, politically, SS will not be made less safe than private pensions.
To quote FDR: "We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics."
Myth 7: Everyone should delay benefits until age 70. Is this really a myth, something people believe or at act on? Fewer than 4% of people wait until age 70 to take benefits. This seems more like the opposite of a myth - something that more people should believe than do.
Comments
Shocking because its coming from Marketwatch, but is nevertheless very well thought out, objective, fact-based and easy to understand. I wonder how an article this helpful made it past the Marketwatch editor.
As for the Trust fund being depleted in 2035: I would hope our politicians would address it, but am skeptical given the decades-long, bi-partisan dysfunction in D.C., that anything will be done, until the last minute.
I do expect that, worst-case, at the last minute, the then-Congress will authorize, and the then-POTUS will sign ,legislation which fully funds retiree benefits using additional US Treasury debt. Any cut in benefits at that time would result in a thorough housecleaning of any scalawags in office who permit benefits to be slashed.
Myth 3: SS is going bankrupt. Let's ignore the fact that bankruptcy is a legal state (you're in bankruptcy court because of a filing or suit), and work with the vernacular sense - that SS is going "bust". That is, it is becoming insolvent, unable to meet its debts as they come due.
That is the path SS is on. It will become insolvent around 2035, per the column. To say this is not "bankruptcy" (i.e. going "bust") is to twist the understanding of "bust". When the issuer of a bond fails to pay 100 cents on the dollar, we say the bond has defaulted. It doesn't matter that it paid out 76 cents, it still defaulted.
Employees who have worked a whole month and at the end of that month are paid 24% less money than promised are getting stiffed by their employer. While they may agree to take less pay going forward in order to keep the company afloat, and to keep alive their hopes of getting that back pay (been there, done that), it's not accurate to say that the company is solvent. Or that they're not owed that back pay. A company may continue operating this way, but so do companies in Chapter 11 (that are literally, legally bankrupt).
This leads to Myth 6, that SS benefits are an earned right. Technically the article is correct. "Benefits can be ... stopped altogether at any time." But do we really want to go there?
In theory, SS is less secure than private pensions, which tend to be treated as legal obligations. Further, private pensions are insured (to certain limits) by an agency of the federal government (PBGC). Pragmatically, politically, SS will not be made less safe than private pensions.
To quote FDR: "We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics."
Myth 7: Everyone should delay benefits until age 70. Is this really a myth, something people believe or at act on? Fewer than 4% of people wait until age 70 to take benefits. This seems more like the opposite of a myth - something that more people should believe than do.