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Monday, October 21, 2013 11:36 AM

Growth in Social Security Benefits vs. Wage Growth

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I have an update from reader Tim Wallace on Social Security.

Hello Mish

I made new Social Security charts that show:

  1. Growth in percent from 1967 in average payout per month to those that receive social security
  2. Amount of money paid out to those that recieve social security per worker in the USA
  3. Average annual wages as presented in the Social Security systems "National Average Wage Index"

Senior citizens continue to receive all the benefits on the backs of the younger generations. By the way, I had to stop at 2011 as 2012 is not published yet.

Percentage Growth in Social Security Payments, Per Worker vs. Wage Growth

click on any chart for sharper image

Social Security Payments Per Worker

Demographics Says Path is Unsustainable

Clearly this payout trend is unsustainable, but what politician dare touch it?

Social Security is not that difficult a problem in theory (at least in comparison to Medicare), except for the politics of it all. Numerous things could be done to put the system in the green.

Possible Ways to Make Social Security Actuarially Sound

  1. Raise retirement age
  2. Raise or eliminate the cap on payroll taxes
  3. Cut benefits
  4. Collect Social Security on personal income
  5. Implement a Tiered Cap structure
  6. Means Testing

Democrats would oppose 1 and 3. Republicans might oppose all but 3. So, how does this mess end if politicians won't touch it?

Mike "Mish" Shedlock

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