Trego's Mountain Ear

I glanced at Viking pundit this morning and read: “Social Security Has About One Decade Left.”

“That is, about ten years from now, the automatic benefit cuts kick in leading to a reduction of 21% in promised benefits.”

The linked article is at a site called Hot Air, so I make no representations about the quality of the data or the need for concern. Hot Air refers to an article at NPR: Congress has less than a decade to fix Social Security before it runs short of cash by Scott Horsley. It’s a 2 minute listen.

It isn’t surprising.

“SCOTT HORSLEY, BYLINE: The annual checkup on Social Security’s finances actually offers some good news. Thanks to workers’ higher productivity and a drop in disabilities, the popular program isn’t burning through cash quite as fast as trustees expected a year ago. But that only delays the inevitable. With tens of millions of baby boomers retiring and starting to draw benefits, and fewer people in the workforce paying taxes for each retiree, Social Security is expected to run short of cash in just over nine years. If that happens, almost 60 million retirees and their families would automatically see their benefits cut by 21%.”

Social Security wasn’t started as some Ponzi scheme – it was based on good actuarial and demographic principles. According to Life Expectancy for Social Security, “ Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65.” The article goes on to explain that the important thing wasn’t life expectancy at birth, but life expectancy at 21. This chart, based on life expectancy at 21, shows the expectations when social security was created in 1935.

Year Cohort Turned 65	Percentage of Population Surviving from Age 21 to Age 65		Average Remaining Life Expectancy for Those Surviving to Age 65
	Male	Female	Male	Female
1940 1950 1960 1970 1980 1990	53.9 56.2 60.1 63.7 67.8 72.3	60.6 65.5 71.3 76.9 80.9 83.6	12.7 13.1 13.2 13.8 14.6 15.3	14.7 16.2 17.4 18.6 19.1 19.6

The problem is that each year, more people have survived to retirement age, and then, to compound the issue, they have lived longer.  Even so, the old guys who did the calculations wound up with unanticipated additions to the system – in 1939, the program was expanded to cover survivors and dependents, and in 1956, another mission creep led to disability coverage for workers over 50 and disabled adult children.  In 1960, the rules were changed to cover disabled workers of any age and their dependents.  Supplemental Social Security was added in 1972.

All told, those civil service employees back in the thirties did a great job with the actuarial and demographic tools at hand.  I can’t necessarily say the same for the congresscritters and senators who have followed them