Want to have fun and make Social Security secure for future generations?
No problem. In fact, it will be easy. Best of all, it can be done “in our spare time, at home.”
How can we do this? Watch TV less and, inevitably, have more sex. Just make sure it results in more children being born.
Not inspired?
Well, there’s something else that’s not nearly as much fun. You can become part of the rapidly expanding Die Sooner, Not Later Movement. The shorter our lives are, the more financially secure Social Security will be.
I am not making this up. While not stated in so many words, I found these powerful keys to our future in an obscure table in the Trustees Annual Social Security Report. The table lists the factors that make the differences between the trustee’s high-cost, intermediate-cost and low-cost estimates for the financial future of the program.
While the trustees focus on the intermediate-cost projections, a close look at the low-cost estimate factors indicates that we could solve of lot of the financing problem with sex and death. What I really like is that those levers are things we do unassisted, no help from Congress required. Also, our actions do much of the heavy lifting.
The way things are going, that’s more than good.
Other actions, discussed in the sidebar, may require greater common sense in business and government. I sidebarred them because we probably shouldn’t take them seriously.
The revealing table in the trustees report has a catchy title: “Table II.C.1. – Key Assumptions and Summary Measures for the Last 65 Years of the Long-Range (75-Year) Projection Period.” Significantly, while the high and intermediate projections have the OASDI (Old Age Security and Disability Income) trust funds gone in 2032 and 2035, respectively, the low-cost projections have the trusts chugging along until 2065. (You can see this in Table IV.B4, here.)
Yes, you read that right: 2065. At least 30 years later than otherwise expected.
You can understand how this could happen by taking a close look at the factors listed by the trustees. (See below.) Let’s see what the two we can control tell us.
| How Our Personal Decisions about Sex and Health Can Improve Social Security | |||
| This table displays the changes in basic assumptions that guide the Social Security Trustees estimates of the long-term solvency of Social Security. Two of the assumptions, the total fertility rate and changes in death rates are grounded in decisions we make about sex and our personal health. The other assumptions are largely controlled by decisions in business and government. | |||
| Personal life assumptions | Low cost | Intermediate | High Cost |
| —Sex: Total Fertility Rate | 2.19 | 1.99 | 1.69 |
| —Death: percent reduction in death rates | 0.28 | .74 | 1.24 |
| Economy, business and government | |||
| —net lawful immigration (thous) | 1,000 | 788 | 595 |
| —net other immigration (thous) | 683 | 457 | 234 |
| —Productivity/year | 1.93% | 1.63% | 1.33% |
| —Real wages in covered employment | 1.74% | 1.14% | .54% |
| —Consumer Price Index | 3.00% | 2.4% | 1.80% |
| —Unemployment Rate | 3.5% | 4.5% | 5.5% |
| Source: https://www.ssa.gov/OACT/TR/2023/II_C_assump.html#101021 | |||
Total Fertility Rate. This figure, a measure of the total number of children born per woman, is the main driver of future population growth. Social Security benefits love the support of a rising working population.
This requires making babies.
Unfortunately, we aren’t producing. According to the St. Louis Federal Reserve data bank, our current TFR is only 1.66. That’s way below replacement rate. More to the point, it’s a bit lower than the high-cost rate that assures early benefit reduction for retirees.
The USA isn’t alone in this. Global figures show that the entire industrialized world is in the same condition, or worse. But wonders could be worked with a modest increase in sexual effort. Think about it — it would take a TFR change from 1.69 to the 2.19, a mere 0.5 increase, to make Social Security more secure.
Unfortunately, the TFR has been below 2.19 since 1971.
But let’s not despair. With Hollywood starving its writers to death and TV facing a dim future, good things may happen. Who knows, perhaps 2024 will be the year America rediscovers sex?
Then again, why leave it to chance? How about a federal program of evening electrical blackouts? Texans, being more familiar with blackouts than people in other states, can lead the way.
America, we can do this!
The second citizen-based factor for securing Social Security is, at best, a mixed bag.
The Percent Reduction in Death Rates. This is a measure of our annual progress in lowering death rates. And since Social Security provides support for the elderly, the more dismal the reduction in death rates, the better financed Social Security will be. (Who says there isn’t a silver lining in every cloud?)
Recent figures suggest that we’ve got death rate reduction running in reverse for some Americans, with significant declines in life expectancy for some minority groups and people who aren’t direct descendants of any member of the Forbes 400.
Life expectancy at birth in the United States peaked in 2014 at 78.84 years. By 2021 it was down to 76.33 years, a bit less than it was in 1997. For all we spend on medical care, Covid hit us harder than any other nation in the Organization for Economic Cooperation and Development, dropping our life expectancy by 1.6 years compared to an average OECD decline of 0.6 years.
For better or worse, we don’t have anything to brag about when it comes to life expectancy at birth. Our expectancy is lower than that of Chile or Estonia, but better than Hungary or Lithuania.
These figures suggest that private citizens are doing the heavy lifting to help finance Social Security. We’re making bad health decisions, all by ourselves. The trade-off we face is simple. We can pay in more money to Social Security. Or we can die sooner. Results indicate that lots of people think dying sooner will be easier and more effective.
We can measure the difference our decisions make in another trustees’ report table, Table V.A4 – Period Life Expectancy. It shows us how dramatic, or mediocre, our gains in life can be. The table estimates future life expectancies based on the different death rate assumptions for the high-cost, intermediate-cost and low-cost projections.
With life expectancy at birth at 75.1 years for males and 80.3 years for females in 2022, here is what the trustees say future life expectancies would look like by 2100:
–Low Cost. Male life expectancy rises to 78.8 years. That’s a gain of only 3.7 years over eight decades. The life expectancy for women rises to 83.8 years, an even smaller gain of only 3.2 years.
–High Cost. Male life expectancy rises to 88.6 years, a gain of 13.5 years. Female life expectancy rises to 91.3 years, a gain of 11.0 years.
Since most Americans are big fans of living longer, I have my doubts that we will continue to knowingly choose shorter over longer lives. The estimated expectancy difference between the high and low-cost estimates over the remainder of this century is a gain of 10.5 years for men. The difference for women is a gain of 7.5 years.
That might be just too much living to pass up.
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And, by the way, there are some factors over which we have no direct control
Immigration. The trustees estimate that more immigrants, legal and illegal, will improve the future financing of Social Security. Immigrants become taxpayers and help compensate for the lower average birth rate among American women.
Productivity. The more we produce per hour of work, the greater the strength of Social Security. More output per worker is akin to the General Motors strategy of “more car, per car” – the higher it is, the more there is to distribute, including to Social Security.
Real Wages in Covered Employment. The more the rewards of productivity are shared with workers whose wages are part of Social Security, the greater the amount of cash available for future benefits. This has been a weak spot for decades. Real wages lost ground to inflation in 2022 and are a mixed bag so far in 2023.
Consumer Price Index. According to the trustees, a 3 percent inflation rate is better for Social Security than one that is lower. As this is written, inflation for 2023 is looking very close to 3 percent.
Unemployment Rate. The more people working, the more paychecks and the more support for Social Security. If unemployment remains at the current low rate of 3.5 percent, this also works well for future retirement benefits.
Related columns:
Scott Burns, “Social Security: It’s all about the cash,” 6/03/2023 https://scottburns.com/social-security-its-all-about-the-cash/
Sources and References:
FRED, St. Louis Federal Reserve Bank, Fertility Rate, Total for the United States:
https://fred.stlouisfed.org/series/SPDYNTFRTINUSA
FRED, St. Louis Federal Reserve Bank, Life Expectancy at Birth, Total for the United States: https://fred.stlouisfed.org/series/SPDYNLE00INUSA
FRED, St. Louis Federal Reserve Bank, Nonfarm Business Sector: Labor Productivity (Output per Hour) for All Workers: https://fred.stlouisfed.org/series/PRS85006091
OECD, Health at a Glance 2021: OECD Indicators, Highlights for the United States: https://www.oecd.org/unitedstates/health-at-a-glance-US-EN.pdf
Social Security Trustees Report 2023, pdf to download: https://www.ssa.gov/OACT/TR/2023/tr2023.pdf
Social Security Trustees Report 2023, Table II.C.1. – Key Assumptions and Summary Measures for the Last 65 Years of the Long-Range (75-Year) Projection Period: https://www.ssa.gov/OACT/TR/2023/II_C_assump.html#101021
Social Security Trustees Report 2023, Table IV.B4— Trust Fund Ratios, Calendar Years 2023-2100: https://www.ssa.gov/OACT/TR/2023/IV_B_LRest.html#473953
Social Security Trustees Report 2023, Table V.A4. —Period Life Expecancy: https://www.ssa.gov/OACT/TR/2023/V_A_demo.html
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Pattie Freeman
(c) Scott Burns, 2023