Yesterday's top news story centered on the report of the trustees for the Social Security system. I am sure that it caught the attention of many retirees like myself, who are concerned that with how the federal government is going to deal with shortfalls in both Medicare (trust funds forecast to run out in 2024) and Social Security (trust funds forecast to be depleted by 2033).  Those of us who depend on these funds for a good part of our income can only hope that our federal government leaders show the same foresight in handling this crisis as they did when they originally created Social Security with FDR's New Deal in the wake of the Great Depresion. 

Nearly all of us paid into Social Security our entire working lives, and our government has taken interest-free loans from this Social Security Trust Fund, which, as I understand it, is merely a fund backed by a "promise"* -- there's no real assets backing the fund, just as each United States dollar is a legal tender backed by fiat (not gold, as some might still misperceive).  I believe the United State Congress can and should find a way to keep it's promise, just as it asked the automakers to keep their promise to pay back the bailouts. 

There are no simple solutions to the pressures brought about by the demographic of a huge number of Baby Boomers retiring. But like many complex problems, this one has to be broken into smaller parts and each of those parts can be solved so that ultimately we have a fair solution for both Baby Boomers and future generations of Americans -- our children. 

*Unlike a typical private pension plan, the Social Security Trust Fund does not hold any marketable assets to secure workers' paid-in contributions. Instead, it holds non-negotiable United States Treasury bonds and U.S. securities backed "by the full faith and credit of the U.S. government". The trust funds have been invested primarily in non-marketable Treasury debt, first, because the Social Security Act prohibits "prefunding" by investment in equities or corporate bonds and, second, because of a general desire to avoid large swings in the Treasuries market that would otherwise result if Social Security invested large sums of payroll tax receipts in marketable government bonds or redeemed these marketable government bonds to pay benefits. 

Here is how Views From My Lanai sees the the broad-brush 5-part solution to the ongoing problem of the 2024 Medicare:

1. Baby Boomers and other Social Security (that includes Yours Truly, of course) recipients must accept a small reduction in benefits. I say "small" because this would amount to a reduction in fixed income, especially important to those who rely solely on Social Security for retirement income.

2. Future generations and current workers must accept a flat-tax increase in FICA (and across-the-board increase in the 6.2% we pay into Social Security and the additional 1.45% we pay into Medicare).

3. The 7.65% that employers pay should remain the same, but that money must be used by the employer in some way to create new jobs (this will take some more detailed figuring).


4. Our Federal Government should make across-the-board reduction in all programs fully or partially funded by the United States Government at an appropriate level to take on its fair share, which should be proportionate to the sacrifice to be made by its citizens in steps No. 1 and 2 of this plan.

4. If and when this approach results in a surplus (well, and "on-paper" surplus as part of "the promise," that is) that surplus should be returned to all those who have paid into Social Security.  After all, it is the hard-working citizens' money that, when spent by Congress, became an interest-free loan, which our Federal Government has an obligation to pay it back to the lenders -- THAT'S US.

With View From My Lanai, I must first confess a rather rigid philosophy: I truly believe that charity begins at home, and it begins with sharing our time and life savings with our children while we are still alive.  Our kids seem to love that philosophy, which--over the past decade or so--has made it possible in part for them to share our vacations with us or visit us in The Villages, Florida (our hometown since July of 2010, when I retired after serving 16 years as Florida State University's chief public relations officer, a 24-7 job).  

Over the past few months, I have been involved in some volunteer work for The Villages Hospice House. I have been one of the prime movers in organizing a golf scramble fundraiser, which will be held in May.  I had been asked to help, and I agreed because my experiences with relatives passing away with the kindly assistance of hospice showed me that this organization is nothing short of excellent in the manner both the dying and the families of the dying are treated. 

However, this work has diminished my focus on my family, and when I complete this charitable work next month, I will return to focusing my charitable efforts on my wife and family.  Sometimes I think the world would be a much better place if we just kept the focus on our families because we have only so much to give.  And I would bet that if we all looked closely at our children, and, perhaps, other relatives, we would find many needs to fill and little time or money to spend elsewhere.  

All this in not to say that I believe we are not entitled to be happy and do those things we personally enjoy-- such as golf and travel in my case--because if you're not happy, you probably won't be able to help those around you be very happy. 

OK, enough philosophy.   Next Post: News and Views --From My Lanai.