In a recent poll conducted by the Nationwide Retirement Institute (NRI), 78% of Americans over the age of 50 feared that the Social Security system would go broke. More than 60% of those that retired in the last 10 years also share this concern.
Roughly 80% of both future and recent retirees believe that funding needs to be increased. In addition, they fear that Social Security faces cuts under the current Republican leadership.
Given the demise of the traditional pension in the private sector, where only 18% are covered by a DB plan, and only 65% of those are active (BLS), it is no wonder that they fear the impact from a reduced or eliminated social safety net.
However, these concerns are misguided. The U.S., with its fiat currency, has “no operational constraint on the government’s ability to meet all Social Security payments”, according to Warren Mosler. According to Mosler, “when it comes time to make SS payments, all the government has to do is change numbers up in the beneficiary’s account and down in the trust fund account”. Importantly, it doesn’t matter if the numbers go negative in the trust fund.
It is truly regrettable that our politicians fail to understand our monetary system. Given that they, too, feel that the Social Security system is broken, they are likely to try to “fix” a problem that doesn’t exist. One can only imagine the remedy!