New Social Security Study Gives the Bad News to Generation X

Generation X has been told since we started working that Social Security would go broke before we would ever receive any benefits.  A new study by Harvard and Dartmouth researchers puts the date at which the Social Security trust funds will be tapped out at 2033.  And the demographics at that point only bring in taxes that can pay 75% of benefits due.

For Generation X, that means that those of us turning 50 this year will see an insolvent program when we hit 68.  Or one year after the current age to receive full benefits.   I just received my statement from the Social Security Administration last week, and it lays out the difference in monthly payments for electing to take Social Security early, at 62, or waiting until you are 67.  And the difference is fairly substantial.  The question is, should the spectre of insolvency in the system make one consider taking the early retirement in order to insure that you get something back?

I don’t think we will actually get to that point of course.   Even with bad demographics due to lower than expected birthrates, there are many ways to fix Social Security.  Raising the age at which benefits can be claimed seems to make sense, given increased lifespans.  And the rate of taxation could be raised, though I would hate to see that.  Likewise one could remove the ceiling on OASDI taxation.  Although I don’t see that the last option raises that much money — the tail of the income distribution.

I fully expect that Generation X will see an increase in the age at which we can draw Social Security.  Time to start re-planning that retirement!

Workforce Generation Gaps

Much ink has been expended on the subject of integrating Boomers, Gen Xers, and Millennials in the workplace.  But which group gives the best job performance?  And is there a performance generation gap in addition to the cultural divides?

A friend on Facebook posted this video from The Economist that discusses an Ernst and Young survey on the workplace effectiveness of Baby Boomers, Generation X, and Millennials (Generation Y).  Overall it looks like Gen X “wins” as having the best combination of work characteristics.  One would think this is unsurprising since at this point, Generation X has at least 10 and up to nearly 30 years of experience, and still have the ambition or need to support a family that makes us keep climbing the greasy pole.  The Baby Boomers at this point have to be actively considering retirement, even if they don’t want to or think they will be able to.  So, I would expect them to start dialing it back.  The chart shows them as being the most cost effective workers.  I think that has to do with the post 50 decline in salary I discussed here along with their effectiveness at the job.  Being at peak earnings makes Generation X a bit less cost effective even though we are arguable better at the job.  As for the Millennials, I guess that combination of being lazy and hard to work with that is reflected in the survey makes them not even worth the fairly low salaries they are getting at this point in their careers!

Waiting for my AARP Card

One of the things I expect to happen as I turn 50 this year is that the AARP will send me a card and an invitation to join up.  I’m not sure about joining the AARP, but I find myself wishing that I could be retired.   When I do hit fifty I would be eligible for Early Retirement at work, if it were offered, but since I can’t access my 401k or Social Security, it would really be “Early Get Another Job”.   Realistically, I’m looking at another 8 years of work to get to 57 1/2 and more than 30 years in.    Its terrible to look be looking at work like a prison sentence!

A few years ago I read Tim Ferris’ book “The 4 Hour Workweek”.  In addition to his technique of outsourcing aspects of your work (and life), he works for a few years and then takes mini-retirements.   Sounds like fun.  But it also seems like it is easiest if you have a life with no major commitments.