Did you ever see one of those slow moving car crashes on TV? You know the kind I’m talking about. It’s the ones where you can see there is no other end than for the two vehicles to meet in a steel shredding collision. It’s so frustrating.
You shout at the screen, knowing the actors driving those cars can’t hear you. But you shout nonetheless. If only either one of them makes the smallest of a turn away from the other automobile, the two metal projectiles will peacefully pass each other, neither aware of the fatal fate that would otherwise await them.
I was reminded of this feeling the other day when I was speaking to an Ivy League finance professor about his latest research.
We digressed for a short discussion on how to fix Social Security.
He harrumphed, “Fix it? The thing’s been a Ponzi Scheme ever since it was created. Anytime you offer a current payout to an initial class that is greater than their contributions, you have the definition of a classic Ponzi Scheme. There is no fixing it, so don’t bother shouting. Just sit back, relax, and enjoy the inevitable catastrophe.”
Well, he’s a professor. He used to dispassionate objectivity.
Me? I, like many of you, live life in a real world. We aren’t mere spectators to this looming car crash, we’re passengers in those very cars!
Financial advisors, particularly those who specialize in retirement, offer the best hands-on experience when it comes to trying to solve the problems posed by Social Security (see, “A Fiduciary Solution to the Social Security Problem,” FiduciaryNews.com, September 9, 2015).
Here’s what surprises me, though, about many practitioners. As smart as they are, the popular Social Security memes constrain their collective creativity.
I could understand politicians succumbing to the “Third Rail” mentality. When professionals surrender to political-think, however, they nullify the one thing that sets them apart from every other commentator on the subject — their front line experience.
When you coax them out of their politically correct shell (as good reporters must), they find themselves free to think outside the box. That’s when their best ideas come to the surface. That’s when you see just how easy it is to forever rid ourselves of this Depression-Era albatross.
I’ve been able to distill three “starting points” to any serious discussion of coming up with a solution to Social Security. No, this isn’t a detailed plan.
Instead, it represents three parameters that must be met in order to come up with a convincing answer to the question that has vexes our nation for more than thirty years (i.e., 1983, the first and last time Social Security was at a similar crossroads). Mind you, the following only pertains to the retirement portion of Social Security.
No. 1: The baby boomer (and older) generation must be exempt from any changes to the program.
Let’s be honest. Any “1983-like” solution merely kicks the can down the road. We don’t want that. We want a permanent solution. That means we need to make fundamental changes in what the program is for and how it does it. As such, it is highly likely current retirees or those nearing retirement would be irreparably harmed by such changes.