That’s a Math Problem...
e If an expense rises by 26% and the ability to pay rises by only 3%, the math doesn’t work. A computer in a science fiction movie might blurt out, ‘does not compute...does not compute...’
e “Something’s Gotta Give...’ as the 2003 film put it.
e A mathematician or economist would say, ‘the expense must go down or the ability to pay must rise to match the expense.’
e Simple math implies that the age for collecting full benefits should rise from 67 to 72, so that expenses more closely match workers’ ability to pay. Under this scenario, while Americans are living 30% longer, the ‘retirement’ age would rise just 7%, still well below the increase in life expectancy since Social Security was created.
KP i USA Inc. | Income Statement Drilldown 139
Social Security: Unless The Program Is Restructured, Cash Flow
Will Turn Negative by 2015E Owing to Aging Population
Real Social Security Annual Operating Income, 1982 — 2036E
IRIN mm 0 wr em owe sae oo tse nae t= = fe = ms SN = 8 A = = 2015+ Permanent $100 ~~~ - ~~~ -- = - Negative Cash Flow --------------------
$0
Annual Social Security Net Cash Flow ($B) Oo Oo
1982 1987 1992 1997 2002 2007 2012E 2017E 2022E 2027E 2032E
Note: Data adjusted for inflation in real 2009 dollars. Includes Disability Insurance. Projection by Social Security Administration
KP in 8/10. Source: Social Security Administration. (@E) www.kpcb.com USA Inc. | Income Statement Drilldown 140
HOUSE_OVERSIGHT_020911