A different take on retirement income and Social Security 

Misleading voters is a trick of the trade for politicians who are masters at it because they take positions widely popular with poorly informed Americans who rarely ask “why,” “how,” or “what are the consequences?”

Improving Social Security benefits and a single payer health system with all health care “free” are indeed appealing; why ask if they are needed or affordable or what such plans really mean to individuals?🤔 Populist rhetoric frequently creates problems that either don’t exist or are misrepresented. Some things are simply not what we perceive them to be. 

I didn’t write the following, but it provides an interesting perspective on Social Security.  I urge you to read the full article. Tomorrow I will present a similar analysis of single-payer government run health care system. 

A 2014 report from the RAND Corporation concluded that “about 71% of individuals ages 66-69 are adequately economically prepared to retire, given expected consumption.” –

We can’t afford to expand social security – and we don’t need to

From the LA Times 

Americans are embracing the idea that we should expand Social Security. A movement started by a few progressive activists spread to opinion makers and ultimately to presidential candidates such as Vermont Sen. Bernie Sanders. But is a broadly expanded Social Security program really necessary? And can we afford it? The best evidence indicates that the answer to both questions is “No.”

For years, the Social Security Administration stated that, for an average person, Social Security replaced about 40% of pre-retirement earnings, versus financial advisors’ recommendation of a total “replacement rate” of about 70%. This gap caused widespread concern, but almost no one understood how the administration generated its 40% statistic. It turned out the administration was using a misleading method — comparing the benefits paid to the average new retiree to the wages of the average, still active worker.

In 2014, the Social Security Trustees removed the calculated replacement rates from their annual report, fearing they may lead to confusion.

The following year, an expert panel appointed by the Social Security Advisory Board recommended a more logical way to determine the replacement rate: comparing Social Security benefits to an average of the retiree’s final years of substantial earnings. When the Congressional Budget Office used this alternative method, it found that Social Security replaced close to 60% of final earnings. For low-income retirees, Social Security replaced close to 100%.

Setting aside the replacement rate issue, some reformers insist that we must expand Social Security because the broader state of the American retirement system is so dire. For instance, some cite data showing that 52% of Americans over age 55 don’t have a retirement account. But roughly half of that group — 25% of the total — have a traditional pension plan. The other half are mostly very poor — with average household incomes of about $20,000 — and will receive a Social Security benefit close to their pre-retirement earnings.

Read the full column 


1 reply »

  1. Well, Social Security as currently structured can’t be all that ineffective, since the poverty rate for people over age 65 has dramatically declined by more than 2/3rds, from 29% in 1966 to 9% today. Compare that to the decline in the national poverty rate – from 19% to 15%. That means, of course, that poverty rates for those under age 65 remained level or perhaps INCREASED during the “War on Poverty”.

    Yes, there are 75MM or so Baby Boomers out there. Yes, their retirement standard of living is likely to be better than that experienced by their parents and grandparents. No, we don’t need to spend any more on old folks than we have already committed – since we are already unwilling to pay for what we have already promised (trust funds running out of assets in the next 15 – 20 years).


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