Kurt Czarnowski, Social Security Expert, on The Trustee Report

Kind of a surprise on Wall Street Dow futures are up 21 points despite the weaker than expected GDP data so and I'll take it up to 21 points on the Dow and yanking get it. Up next we're joined by curtains are now ski from the formerly from the department of -- Social Security's now consultant speaking on this topic Kurt welcome to the show Daria Dolan. -- no idea. -- -- Well good morning to you and you know Kurt we worked together for several years and you know over that time he would I remember a few years ago you said -- Social Security's headed for big trouble in the year 2037 and it was 2036 hour at 2033. -- what's happening. In our economy here in our government or in our country. That's causing Social Security to move -- colts are closer to this deficit that there had it for this clip if you will that there headed for the year 2033. -- and debt collectors understand. Egypt every year at the Social Security board of trustees reports the American public tries to project. The financial future of the Social Security program over the next 75 years -- so the most recent report about the past Monday as you correctly point out. Trustees' report 2012. Basically projects Social Security will have enough money to pay 800% of promised benefits through the year 2033. But at that point going forward. It's only gonna have enough money to pay about three quarters of promised benefits so why has there been this change. Simple economy you know on the demographics side Social Security is always known about the retirement of the baby boom generation -- -- out there. Sure. But -- Why with the economy be impacting occurred I mean a what would aspect of what's going on in our economy would cause Social Security to be going bankrupt at a faster rate than we had originally anticipated. -- -- Peja ecosystem Barry talked about this before that it is that. Might get tax dollars paid today by employers employees and self employed individuals. That are turned around largely used been the benefit -- today's Social Security beneficiaries. Right now because the economy has been performing poorly. There -- less. Quite get tax money coming into this system -- had been projected previously. Thank god NL and also they have the holiday to -- they've had this two year like a tax holiday. Well. It's going to be interesting to see how all of this plays out because yes. There is say 2% reduction in the employee portion. Last year again this year but congress head included in that legislation provision that the treasury would. Return to Social Security. The amount of money that had been. That had not commit because the fight it tax reductions must demand that of the new diesel system would be -- -- Right but he -- Do you find it curious -- that you -- get this report on Monday of this week we've covered the story all week. I haven't heard anybody in congress -- in Washington talking about the solutions what are the you know you you worked in the system for a long time he'd been around the block. I'm not suggesting your old. But but like what are the solutions are very you know the if it doesn't seem terribly complicated to me. It really isn't very you know compared this state health care or Medicare Social Security's really kind of a more simple problem. It's up -- ecosystems -- get money coming in money going out. It's not totally dissimilar to your home budget situation if at the end of the month you don't have enough money on hand to. -- all your obligations he could do one of two things you gotta find a way to bring more money in during the month or. Cut some expenses and pay a little bit less money -- no different for Social Security. Even need to bring more money in or pay less out in benefits to be able to continue to pay percent of promised benefits when it comes side. Anyone of a number of things you can do. It's funded primarily. Through that -- get -- federal parent contribution back. That does it come Lee thank -- it takes money out of my paycheck every week. Absolute -- fight. But. Normally you have an employee paid six point 2% your employer pays six point 2%. That -- get tax rate -- Has been constant since 1991. So anyway debris and I'm not advocating that but they just don't you bring -- -- it is due to increased. The tax -- a little bit. On top of that we talked before. Under the Social Security program you're gonna pay that six point 2%. On a six -- And in 2012. You're gonna pay that on the first 1101100. Dollars that you make that capped a cap. Has always been -- place or perhaps you could raise. That cap a little bit -- a lot of people think mistakenly that that would. Do away with a probable the government really quick because that cap does commit to play. What benefits are calculated so that if you eliminate the cap yes it may be a temporary increase in income but it won't all be for the good because. Benefits will be hired down on the road but. I think actually our -- I think part of the Romney plan was to raise the cap and reduce benefits for higher paid workers. Short video that you could do that as well close -- -- would make it from your perspective you watched the system -- you -- be -- one of the few people in the country that actually reads the Social Security report. How much more expensive does this become to -- as we wait because you know I remember probably 45 years ago we talked about it and it wasn't that bad. Now you got two problems one. The four you know we're not 2007 anymore -- in 2012. And we're not going Boston 2037 anymore and our own Boston 2033. So this -- your past to become markedly more expensive. Every month that we wait to fix the problem. Oh absolutely because as you wait and wait and wait you get a more expensive year at the end of this 75 year evaluation period absolutely and it. But besides the financial aspect of your really need to address the issue to -- day. So that younger workers in particular. We'll know what the system will be like for them and they can plan accordingly this uncertainty going forward. That you hero what kind of -- what I'm I'm talking to folks wondering what the future of the program going to be in congress really needs to act responsibly. Addressed the issued today with some. Reasonable steps clothes that financing gaps so that young people in particular in every -- Let me ask -- because I've heard this and I know you have to -- I can't tell you how many times people come up to me if I'm doing speaking engagement they'll say to me. Hey you know I collected my Social Security 62 because I don't trust the government and on and get as much as I can now even though and taken an 8% haircut for a year. What would advice do you have for our listeners that are under the age of fifty -- which should they'd be doing. To to help. They -- situation in terms of you know planning for retirement and in understanding what's involved with Social Security. Well I think you know big part in and you and I always talk about this message together Social Security was never intended to be your only source of income in retirement. And so if you're young worker you should be counting on something from Social Security but you should be viewing it as a base or foundation. And you should be actively taking steps. To supplement your Social Security tape whether it's through. Financing or finding your defined contribution pension horse saving it up. Higher prayer -- People of any age ought to recognize Social Security was never supposed to be your only source of income in retirement. And you need to find ways to supplement that the younger you want the Sunnis start to take those steps more likely -- -- comfortable retirement down the road and that. Should be that. Matra of people regardless of the future financial shape the Social Security program. -- wild -- thank you very much for your time -- really appreciate your joining us and given us the straight skinny. On what's going on with Social Security excellent. Art -- very it was good to have to do would.