Thursday, August 14, 2008

A perspective on the social security fund.

Do you think that by the time all baby boomers retire will be enough social security (SS) money to pay everyone in the system?
That is a good question, for which they are multiple good answers if you consider this or that... Common wisdom tells you that the Social Security System is a pay as you go system. Meaning, those that work pay for those that are retired. They also say, that the ratio of workers to retire will continue to shrink to the point where there will be four workers for every retiree, 10 to 30 years into the future.
Based on those premises alone, the numbers do not add up to pay all retirees.
Is that really the case?
Consider this; a worker who earned $40,000 each thru most part of his working life will be supported by four new workers earning a salary of over $100,000 each.
Perhaps, the total contribution of these new workers could possible be enough to pay out one retiree.
Maybe true or maybe false! I do not know, until I do the math. If anyone can do the math right...

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