# Why is Social Security unsustainable? **URL:** \ **Category:** Great Debates\ **Created:** [August 4, 2011, 12:12pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451 "2011-08-04T12:12:43Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [August 4, 2011, 5:12pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/41 "2011-08-04T17:12:36Z")
> [@Shodan](#): > > No. > > To forestall where I expect you’re going, I will propose a deal. If you send me $100 today, I will repay you $110 next year, if you send me $200 next year. Does that promise to repay you from money you will send me next year constitute an asset in a way the Social Security trust fund is not? > No, actually it is entirely accurate and correct in every detail. Again, no - the upshot is that the SS Trust Fund is a debt that must be repaid by the taxpayer. It is not an asset. > > It is exactly what I said it is - a commitment by the US government to extract money from the taxpayer in the future, because the money extracted in the past that did not go to SS benefits was spent on something else. > > Regards, > Shodan At least you are consistent in your beliefs that the US could and perhaps should default on its debts. This is why, however, that your promise to pay a debt in the future is not the same as a treasury bill. Full faith and credit from shodan along with two bucks will get you a cup of coffee. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2011, 5:14pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/42 "2011-08-04T17:14:01Z")
> [@FixMyIgnorance](#): > > So, in SS, everyone’s cashing out, but at different points. Are we contributing funds to SS based on the AVERAGE life expectancy? In other words, are we paying for a system that assumes death at a certain age, where some will die before (and thus be paying “more” than they’d ideally want to beforehand) and some will die after (reaping maximal benefit from the system)? > > In other words, is this an accurate way to model it? Pretty much. My Dad died when he was 58. So 40 years worth of paying into Social Security left my family with zilch (except for the $255 death benefit my mom received). Had he invested that money in a private IRA, my Mom would be able to use that money for her retirement. Instead, it is socialized into the system. People like my Dad who die in their late 50s are the cash cow for the system. People who live to be 105 are drains on the system. But it is structured so that (roughly) it takes in enough to pay for the retirees. ---
**Author:** ![Omg\_a\_Black\_Conservative](https://avatars.discourse-cdn.com/v4/letter/o/7ba0ec/32.png) [@Omg\_a\_Black\_Conservative](https://boards.straightdope.com/u/Omg_a_Black_Conservative)\ **Post date:** [August 4, 2011, 5:14pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/43 "2011-08-04T17:14:55Z")
> [@Simplicio](#): > > If the ratio of workers to retirees stays the same, it will be sustainable indefinately. The ratio of workers to retirees is _decreasing_, meaning SS can’t be sustained indefinitely. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [August 4, 2011, 5:18pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/44 "2011-08-04T17:18:48Z")
> [@Omg\_a\_Black\_Conservative](#): > > The ratio of workers to retirees is _decreasing_, meaning SS can’t be sustained indefinitely. Do you believe this trend will continue forever? Why? ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [August 4, 2011, 5:19pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/45 "2011-08-04T17:19:25Z")
I > [@jtgain](#): > > Pretty much. My Dad died when he was 58. So 40 years worth of paying into Social Security left my family with zilch (except for the $255 death benefit my mom received). > > Had he invested that money in a private IRA, my Mom would be able to use that money for her retirement. Instead, it is socialized into the system. People like my Dad who die in their late 50s are the cash cow for the system. People who live to be 105 are drains on the system. But it is structured so that (roughly) it takes in enough to pay for the retirees. I thought survivor benefits for widows/widowers and dependent children were much more extensive than that. The SSA website suggests as much as well. ---
**Author:** ![Omg\_a\_Black\_Conservative](https://avatars.discourse-cdn.com/v4/letter/o/7ba0ec/32.png) [@Omg\_a\_Black\_Conservative](https://boards.straightdope.com/u/Omg_a_Black_Conservative)\ **Post date:** [August 4, 2011, 5:21pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/46 "2011-08-04T17:21:53Z")
> [@Jas09](#): > > Do you believe this trend will continue forever? Why? It’s a near 50 year trend and will continue, conceivably, for the next 40 - 50 years, at least. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 4, 2011, 5:22pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/47 "2011-08-04T17:22:55Z")
> [@FixMyIgnorance](#): > > Okay, if someone can answer this I think it will clear up my confusion: > > In a standard insurance structure, a bunch of people pay a tiny bit for protection. Then, in the event of disaster, they are fully covered because the sum of all those premium inflows help fund the coverage. So I can opt out of insurance and either experience a state of maximum wealth or maximum destruction/cost, or I can pay a bit more and ensure a particular level of wealth/cost. In other words, I decrease risk. > > Insurance works because, in short, the people who experience no loss are funding those that do. But everyone gets protection – it’s just that we expect, based on probability, that not EVERYONE will get hit with the same systematic risk. > > So, in SS, everyone’s cashing out, but at different points. Are we contributing funds to SS based on the AVERAGE life expectancy? In other words, are we paying for a system that assumes death at a certain age, where some will die before (and thus be paying “more” than they’d ideally want to beforehand) and some will die after (reaping maximal benefit from the system)? > > In other words, is this an accurate way to model it? I think that this is a good summary, though the computation of expected payouts is a lot more sophisticated than just average life expectancy (as measured from a given age.) If you get an SS statement, you’ll see that they give you monthly benefits if you retire at 62, 64, 66, 68, or 70 (and you can interpolate the rest.) They go up the longer you wait, which is based on the shorter amount of time you collect and the chance you will die before collecting. People dying before they collect contribute to the systems, as do undocumented workers who pay but who never will get anything back. Some other points - the best way to ensure we always pay our debts it to throw Tea Party Congressmorons into a dungeons somewhere and lose the key. You’ll hear that the trust fund is now running a deficit. This is a feature, not a bug. As a Baby Boomer, I’ve paid in a long time. If the trust fund is still running a surplus when me and my cohort are collecting benefits, the taxes are way too high. When we kick it, payouts go down. We are running a deficit early because of high unemployment, not demographics. Since the tax is set based on projections of demographics and the state of the economy, modifications always should be expected. Calling it unsustainable because of the modifications is no more reasonable than saying that we can’t reach the moon because we have to make course corrections on the way. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2011, 5:22pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/48 "2011-08-04T17:22:58Z")
> [@Hentor\_the\_Barbarian](#): > > Full faith and credit from shodan along with two bucks will get you a cup of coffee. I believe that this misses the point that the fact that there is a surplus in the Social Security Trust Fund held by treasuries is meaningless. Sure, full faith and credit and all of that, but in order to pay, the government has to do everything they would do if there were no trust fund. Scenario #1: No SS Trust Fund. When there is a shortfall in SS revenues, in order to pay benefits, the government will have to raise taxes, borrow more money, or cut spending elsewhere. Scenario #2: Current SS Trust Fund. When there is a shortfall in SS revenues, the SS Trust Fund will have to sell treasury bonds in its portfolio to pay benefits. In order to pay for these bonds, the government will have to raise taxes, borrow more money, or cut spending elsewhere. What is functionally different between these scenarios that makes the SS Trust Fund anything more than a masturbatory fantasy on a balance sheet? ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2011, 5:24pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/49 "2011-08-04T17:24:48Z")
> [@Hentor\_the\_Barbarian](#): > > I > I thought survivor benefits for widows/widowers and dependent children were much more extensive than that. The SSA website suggests as much as well. But she works as well. She did the calculation it wouldn’t make any meaningful difference to claim survivor benefits. In fact, I believe that she would have had to retire early and actually collect lesser benefits. It’s been a few years, but it ended up that my Dad’s contribution was zip. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [August 4, 2011, 5:25pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/50 "2011-08-04T17:25:25Z")
> [@Omg\_a\_Black\_Conservative](#): > > It’s a near 50 year trend and will continue, conceivably, for the next 40 - 50 years, at least. What was the ratio in 1975 (3.2)? 1980 (3.2)? 2008 (3.2)? Why is that a trend? [http://www.ssa.gov/history/ratios.html](http://www.ssa.gov/history/ratios.html) ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [August 4, 2011, 5:26pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/51 "2011-08-04T17:26:59Z")
> [@jtgain](#): > > What is functionally different between these scenarios that makes the SS Trust Fund anything more than a masturbatory fantasy on a balance sheet? I will ask you the same question I asked Shodan: What would the federal debt be if the SS Trust Fund had never bought any US debt, but rather held any surplus as cash? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 4, 2011, 5:28pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/52 "2011-08-04T17:28:44Z")
> [@Omg\_a\_Black\_Conservative](#): > > The ratio of workers to retirees is _decreasing_, meaning SS can’t be sustained indefinitely. Fortunately, they figured that out when they saw the birth rates for my generation, which is why we’ve been running a surplus for so long. Have a cite about how long this is expected to continue? You can’t just use birth rate - I think maybe two or three people in my wing of the building were born in the US. Some I know have moved back to India, helping us by adding the coffers while never collecting benefits. If it continues forever, our population should decline - not a bad thing, but not expected in the US. If China had SS they’d be screwed. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2011, 5:34pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/53 "2011-08-04T17:34:54Z")
> [@Jas09](#): > > I will ask you the same question I asked Shodan: What would the federal debt be if the SS Trust Fund had never bought any US debt, but rather held any surplus as cash? It would be exactly the same. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [August 4, 2011, 5:43pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/54 "2011-08-04T17:43:21Z")
> [@jtgain](#): > > It would be exactly the same. Thank you. So how does the method of how the SS Trust Fund was invested make any difference in its sustainability? Bonds would be coming due, to be funded by taxpayers, either way. By your own acknowledgment, they would be coming due _in the same amount_. How does it matter whether we are paying China or SS beneficiaries (except in the small sense that at least taxpayers are paying Americans interest rather than Chinese) when we pay off those debts? The fact that Social Security surpluses were invested in US Bonds (bonds that would have been sold anyways) doesn’t mean that they don’t “count” towards the programs solvency. I think you know this, but there are certainly others that don’t, and continue to buy the meme that because the surpluses were invested in US Bonds they were “spent” and “don’t count”. In the end I wish the SS Trust Fund had been kept entirely separate, so we wouldn’t have been using it to mask our deficit problem. But that boat sailed a long, long time ago. And I refuse to let that accounting change be used a cudgel to force privatization or massive benefit cuts. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 4, 2011, 5:52pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/55 "2011-08-04T17:52:47Z")
> [@Grumman](#): > > Doublethink aside, what this really means is that yes, it’s unsustainable. The cost-to-benefit ratio currently provided cannot be sustained without causing the collapse of Social Security. At some point, you’re going to have to modify it so that it _is_ sustainable. Tomato, tomato. Social Security was also called unsustainable in the 1980s. Policies were changed, and it became sustainable for multiple decades. If you want to go around labeling things “unsustainable” that can be fixed with fairly small changes, knock yourself out – but I think I properly qualified my original statement. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 4, 2011, 6:05pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/56 "2011-08-04T18:05:03Z")
Social Security is funded from pay checks. It can not hit the treasury for short falls. If nothing is changed, in 30 years it will be able to pay off 80 percent. As long as money is being collected from checks, it can not go broke. All we have to tweak it and it will be fine. The huge fund that is in the SS fund was deliberately planned to solve the baby boomers. It is set to expire when the boomers die off. One way to fix it is to cut down the unemployment problem. But like McConnel said, the Repubs will do whatever it takes to defeat Obama. That includes preventing Obama from doing anything meaningful about jobs. ---
**Author:** ![Chessic\_Sense](https://avatars.discourse-cdn.com/v4/letter/c/7c8e57/32.png) [@Chessic\_Sense](https://boards.straightdope.com/u/Chessic_Sense)\ **Post date:** [August 4, 2011, 6:19pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/57 "2011-08-04T18:19:13Z")
> [@Simplicio](#): > > other then survivor benefits > [@Simplicio](#): > > That ration will be less then it was…they’re a lot more productive then they used to be > [@Simplicio](#): > > Not all cashing out is created equal, though. Someone that dies at 70 gets less then they paid in, someone that dies at 100 gets much more. > [@Simplicio](#): > > The ratio of workers to retirees has increased by much more then that. “TH **A** N”!! ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [August 4, 2011, 7:15pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/58 "2011-08-04T19:15:55Z")
> [@Ravenman](#): > > Policies were changed, and it became sustainable for multiple decades. You keep using that word. I do not think it means what you think it means. Seriously, are you doing this on purpose? You keep on saying Social Security is sustainable, and then describing the reasons why it’s not. For a system that spans generations, not collapsing for “multiple decades” isn’t good enough. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2011, 7:26pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/59 "2011-08-04T19:26:55Z")
> [@Jas09](#): > > The fact that Social Security surpluses were invested in US Bonds (bonds that would have been sold anyways) doesn’t mean that they don’t “count” towards the programs solvency. > > I think you know this, but there are certainly others that don’t, and continue to buy the meme that because the surpluses were invested in US Bonds they were “spent” and “don’t count”. But the funds have been spent and they don’t count. They don’t count because a debt which you owe to yourself is not an asset. They don’t count anymore than you raiding your 401k and filling it with Jas09 bonds. Even if you are the greatest credit risk in the world, you still spent the money and can’t now claim that your 401k is fully funded with assets. Again, go back to my prior post. They way that benefits will be paid out will be the same whether we assume a trust fund filled with assets or not. Under your theory of the trust fund, mine, or Shodan’s, the way that benefits will be paid is identical. The trust fund has been spent. The government is one entity. You can’t parcel your wealth into separate accounts arbitrarily, borrow from one to pay the other and pretend that the first account is doing great. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [August 4, 2011, 7:31pm UTC](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451/60 "2011-08-04T19:31:28Z")
> [@jtgain](#): > > But the funds have been spent and they don’t count. They don’t count because a debt which you owe to yourself is not an asset. They don’t count anymore than you raiding your 401k and filling it with Jas09 bonds. Even if you are the greatest credit risk in the world, you still spent the money and can’t now claim that your 401k is fully funded with assets. > > Again, go back to my prior post. They way that benefits will be paid out will be the same whether we assume a trust fund filled with assets or not. Under your theory of the trust fund, mine, or Shodan’s, the way that benefits will be paid is identical. > > The trust fund has been spent. The government is one entity. You can’t parcel your wealth into separate accounts arbitrarily, borrow from one to pay the other and pretend that the first account is doing great. See, now your back on the crazy train. The trust fund has not been spent. General fund obligations have been spent. They were funded by borrowing from the SS Trust Fund… ah, screw it, there are plenty of threads covering this, and I promised myself I wouldn’t do it again. [Previous page](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451.md?page=2) [Next page](https://boards.straightdope.com/t/why-is-social-security-unsustainable/591451.md?page=4)