social-security-picThe Social Security Act was signed by FDR in 1935 to help combat the Great Depression and provide a safety net for America’s seniors. It’s a program with complex challenges in future funding, partially due to the burgeoning Baby Boomer generation altering fundamental proportional demographics – simply, more people will retire and draw on Social Security in the next couple decades as a proportion of the overall population than at any other time in the program’s history. In fact, Social Security outflows are forecasted to exceed inflows by around 2030, so lawmakers need to plan now for this eventuality, or be forced to cut benefits drastically when it comes. The 8% yearly raise on benefits for waiting until age 70 to withdraw benefits is an obvious place to start. It’s not that an incentive to wait to withdraw benefits is bad; in fact, its a great idea. However, 8% is way overpriced for taxpayers. Any hedge fund manager or financial planner who could bring his or her clients an 8% risk-free return year after year in a period of near-zero interest rates would become the next Warren Buffett and overnight billionaire. Instead, Social Security raises should be indexed to GDP growth or a similar indicator that reflects market prices. This would still incentive many risk-averse people  to put off withdrawing their benefits while avoiding paying far beyond market prices to do so. It’s the first step in creating a sustainable future for the Social Security Program.

See  Mark W. Hendrickson’s opinion article on this topic at