France / UK are both facing financial death spirals due to their overly generous entitlement systems. France had to push its pension collection age back and that brought massive riots and still wasn't enough to stop the debt spiral.

We are only a few years behind them - SS and Medicare are unsustainable with our population outlook. I'm not even planning on either being around since SS goes broke in the early 2030s.

 

Not sure about medicare.

But SS is nowhere near as bad as some make out. It is not going broke in the 2030's, what happens is this...

SS has been running a deficit for a while, between annual income and outlays. They've been making up that deficit with funds which the SSA had previously loaned to the federal government for other purposes, during an era when SS ran a surplus.

The money in that loan account will run out soon, which will require SSA (congress actually) to close the deficit gap. It's not a catastrophic gap, and there are several ways to fix it...

- Small delay in full retirement age. This has happened before, and would presumably be phased in slowly, like a month at a time.

- Modest increase in payroll taxes.

- Increase in SS taxes on employees. Could take several forms, we're already seeing a trend to want to remove the cap on income that's subject to SS tax, so wealthy people (ie us) will pay more tax on our income but won't see any benefit from that, since the cap on SS benefit amount will remain.

- Means testing retirees (experts consider this politically non-palatable).

My financial advisors predict this will be dealt with, and there won't be a reduction in benefit (more than maybe token) for those already retired, or nearing retirement. You can do some research, plenty of people in the personal finance space are talking about this and nobody seems to be predicting any sort of catastrophe.

Also the baby boom is a big part (or all) of the problem. As boomers die off, subsequent generations will be in a better balance between working and retired population, so the deficit is likely temporary (all else equal).

Yes millennials might have to pay more to fund boomers' retirement... that doesn't bother me though.
1. Traditionally in human society you take care of your elderly parents.
2. They'll inherit a bunch of that wealth soon enough anyway.

 

Pretty sure the answer will be a combination of the above… tax at a higher rate , charge more to those who make more with no added benefit, make you wait longer to get any benefit and then tell you that since you made so much, you really don’t need it anyway so you get even less of a benefit.

 

Agree with both of the above. Was reading an article a few years back and just 15ish years ago all that was needed was to remove the income cap and it would stay solvent for something like through the millennial generation with no age or additional tax increases. I kind of wish that would have just happened at the time. Now it’s going to take a bit of everything mentioned.

 

I'm right on the X/Millenial boundary.

1-Traditionally in human society, elderly parents also help with grandkids. Been a whole lot of "NOT MY JOB" from my parents, friends parents, vs how involved our grandparents (Greatest Gen mostly) would watch kids after school if mom was working, take the kids for the weekend once in a while, etc. This goes both ways. My dad did a lot of work around my grandparents farm and house (with me "helping") and my grandparents were basically default childcare for most of my cousins and I. Out of my parents/aunts/uncles, maybe 1/4 of them have anywhere near that level of helping family, they are too busy on cruises, doing whatver, but you bet your bottom dollar the moment someone's boiler is being wonky, or a deck needs to be rebuilt, my cousins get a call and then they call me. Mind you, it is normally the ones who are financially secure wanting us to "take care of elders" and I basically had to show up with my 10 of my cousins and do a deck raising when a not well off uncle with no kids needed one bad. Like he fell through the deck bad, and he's not fat.

2-That wealth, isn't going to make it to a lot of GenX/Millenials. Numerous cases of friends parents selling house or farm that's been in family for generations to highest bidder then taking the proceeds and going on endless trips, eating out, big dollar motorhomes, etc. Then you have the end of life expense. That made all my grandmothers wealth go POOF. She had a living will, and a DNR. The hospital fought/delayed/denied and made us take them to court to take her off life support (was in persistent vegetative state after massive stroke) funny they stopped fighting us, right about the time the bill was close to what her estate was worth. I don't put this on the Boomers and older, I put this on the medical industry, but not everyone has their assets structured in living trusts and other stuff that is common for people at our income levels.

 

There are actually a lot of articles out there about how the Boomer wealth transferring to their GenX / Millennial children is mostly a myth.

Dispelling myths about the ‘Great Wealth Transfer’ | CFA Institute
The Great Wealth Transfer From Boomers to Millennials Is Overblown - Bloomberg

Yes, there will be some wealthy baby boomers who pass their wealth on to their kids, but they are in the minority.

Most unfortunately are like the LEPF crowd and have blown it on alimony, boats and who knows what else. For most Millennial / Gen X kids, we will get nothing.

 

I'm talking very broadly about the entire demographics, of course there will be myriad individual circumstances.

The younger people most likely to pay more SS due to higher socioeconomic status are also the ones more likely to inherit.

I'm likely to pay more SS tax at the end of my career, but not for as long as millennials. Also more likely than boomers to get my benefits reduced by one mechanism or another. So as usual caught in the middle. I expect younger generations to eventually enjoy a re-balancing of SS as boomer numbers decline. Gen X is a much thinner cohort over their 15 year span, so less SS burden.

 

I've never stated or believed it will be a vast windfall, but it will be significant... how can it not, they have a lot of wealth but significantly fewer kids per capita than older generations (who needed help on the farm, and weren't inclined to birth control). Even in the hypothetical where they blow it all on yachts and vacations, there are still all the houses... those either transfer directly, or if sold, will glut the market and make homes more affordable.

There is some societal benefit to elderly couples and singles moving into smaller homes/condos/care facilities, and making the larger homes available for families. But I'm not interested in any .gov scheme to force them to leave their homes before they're ready.

The non-paywall article says there's plenty of wealth, it's just not distributed very evenly. Fine, the kids can discuss amongst themselves how to tax and distribute it.

 

I think it's more along the lines of most kids will get nothing, and the kids of the small % of wealthy that pass an estate on will get a lot. Same as it ever was.

 

Where do all the houses in the 'burbs go?