My Solution to Save Social Security -- Wacky or Brilliant?
You tell me
Ric Edelman: It's Tuesday, March 7th, and we have a crisis with our Social Security Trust Fund. You've heard me talk about this an awful lot. I'm going to set that up for you so you understand exactly what the problem is. And then I'm going to tell you a crazy solution. I wonder maybe if it might work. You'll be the judge. Anyway, we know what the Social Security Trust Fund crisis is. We have a problem. We don't have enough workers anymore relative to the number of retirees we had way back in 1935 when the Social Security system was started. We had 135 workers for every retiree in this country, meaning a lot of people paying money into the system, very few taking the money out. Fast forward to today, we only have three workers for every retiree.
The result? Social Security is only collecting about 75% of the money it needs to pay benefits. Collecting that is from workers via Social Security taxes. So if workers are only putting in $3 out of $4 that are coming out. Where's the fourth dollar coming from? It's coming from the Social Security Trust Fund. Yeah, about 25% of the money that retirees are receiving is coming from a bucket of money, a bucket that is fast dwindling. And it's projected by around 2031, that bucket will be empty. Under current law, when that happens, Social Security benefits are going to be limited to what can be provided by the tax revenue itself.
Well, if the taxes are only enough to pay for 75% of the benefits, that's all the benefit. You're going to get $3 out of $4. This is under current law, meaning if Congress takes no action, that's the way it's going to be. All Social Security retirees are going to get a 25% cut across the board in their income.
This is an economic crisis of massive magnitude because so many retirees are fully dependent or largely dependent on their Social Security checks for support, their rent or mortgage payment, food, medicine if they don't have enough income from Social Security. A lot of people are going to be homeless or hungry. I mean, think about it. Could you afford a 25% cut in pay? That's what's facing retirees less than 10 years from now. So, yeah, it's a bit of a problem.
Well, there are only two solutions to this problem, and we've talked about them a lot on this show. Congress either has to cut benefits to reduce the amount of money each person gets or increase taxes. That's really about it. Generate more revenue or reduce the outflow. Well, here's a wacky idea. And yeah, you may well agree with me by the time you hear this that it is indeed wacky. But let me offer it anyway. What if we just appealed to everybody's patriotism instead? What if we just asked each other for some help instead of Congress mandating benefit cuts or mandating tax increases? What if we just acknowledged we have a problem and we all turned to volunteerism? You know…if I were the president...have you ever said that to yourself?
Well, anyway, if I was the president, I would say to the American people, hey, you've worked hard, you've paid a lot of money into the Social Security system for decades. You're entitled to receive all the Social Security benefits you deserve in your retirement. But our country is in trouble. And I ask you for help. Please. I'm asking you to voluntarily reduce the amount of money that you receive from Social Security. Just reduce your check by $1, $5, whatever you feel you can afford. If you're one of the country's 22 million millionaires, I think you can afford to give up your entire Social Security check. I'm not demanding that you do this. We're not going to impose that on you. We're not proposing any law that takes your check away from you. It is your check. But I'm asking you to please recognize that we simply don't have the money to continue paying all these checks to all these folks. So will you please join us in voluntarily reducing the amount of your check? I'm going to lead the way by reducing mine. I'm telling the Social Security Administration to stop sending me my entire Social Security check. And I'm asking you to please reduce the amount you receive as well. You can change your mind at any time. We'll restart sending you your full checks from Social Security. But for now, for a while. Will you please do this for us? Will you help us? Will you help the country, the community? Your neighbors?
I think that by appealing to America's generosity, to our philanthropy, to our patriotism, to helping our elders and those less fortunate, that millions of people with the right leadership would rally to this call and they'd voluntarily lower their Social Security checks. It'd be like the Got Milk campaign where celebrities brag that they were drinking milk or the Ice Bucket Challenge, where people bragged about having a bucket of ice dumped on their heads for charity.
Warren Buffett doesn't need his Social Security check, but he's been collecting it for 30 years. Nobody has ever given him a reason or any motivation to turn that check down. So let's make it a national rallying cry. Warren and everybody else, from billionaires to ordinary millionaires, will voluntarily give up their Social Security checks. We didn't need a law to get people to stop wearing fur coats. Society made that decision by appealing to those who buy fur that it's cruel and leads to needless animal suffering. Let our social media influencers and celebrities and major corporations and yes, our politicians, let them all get behind this. Let's turn to volunteerism and patriotism. All we need is leadership from the White House and Congress.
And yeah, I guess that's why this idea will never get anywhere, because today in Washington, we have elected officials, not national leaders. Well, now you know why you're happy that I'm not president. It's okay. My idea makes no sense. It's completely unworkable. And it'd never be successful. Just plain dumb. Okay. All that means is that we're stuck with the alternatives. Coming to you within the next 10 years are big, mandatory cuts to Social Security. Big mandatory tax increases. Choose your poison.
So tell me what you think of my idea and tell me your own ideas, too, for saving Social Security. Post your comments on my social media channels at Facebook, Twitter, Instagram, and YouTube or email me at AskRic@TheTruthAYF.com. All these links are in today's show notes. And yeah, I gotta run. I'm prepping for a webinar that I'm giving for LifeMark Securities today on understanding blockchain and digital assets. Is Bitcoin a fad or a revolutionary technology that will transform commerce on a global scale? This LifeMark event is for hundreds of advisors. It's a closed event. Sorry you can't join us for it. I'm doing a lot of these events as RIAs and brokerage firms, banks, insurance companies, pension funds and endowments, they're all realizing that their boards, their executives and their advisors don't know a whole lot about crypto. And there aren't very many places to turn because pretty much the only people talking about crypto are the folks who are promoting products about it: crypto funds and exchanges and whatnot. I created DACFP, the Digital Assets Council of Financial Professionals, to be the leading crypto education company, and that's what we are today. We don't sell products. We don't manage assets. All we do is training and education about digital assets and blockchain. So I'm looking forward to talking with the folks at LifeMark today. If your organization wants to get up to speed on crypto, just contact me at AskRic@TheTruthAYF.com.