The Capitalist Investor
In this week's episode of The Capitalist Investor, we delve into Social Security. What is the future of social security? What are the options on the table? What are the possibilities? In this thought-provoking discussion, we will explore these themes in detail, providing analysis and insights into their potential impact on the economy & your future income.
So welcome to this week's episode of The Capitalist Investor. I got David Batty. Still don't have a nickname for you, but I'm sure it'll it'll present itself when it's ready. And then we got Luke. Cool Hand Luke. We're missing Deke because he had apparently had too much fun and went too hard down in Disney World. Yeah, I do. Always on vacation. I love it. And then you got me, Tony, that tiger. But anyway, it's like the cereal brand, right? That is, man, that are great. Anyway, we are talking about Social Security Day was a a request from from one of our listeners. And you know, the contact of the context of the the request was, you know, what happens You know, how can we plan a you know, plan around it and what's going to happen? When could it happen and kind of go from there. So I guess our biggest thing is to talk about like what the what the options are out there that are being talked about. Because at the end of the day, Social Security, everyone, most everyone pays into it and everyone will expect to receive money from it. And, you know, and I think the younger generations are starting to feel that it won't be around for them. Well, I wish I could elected to not pay money into it. I know that's not an option, but it would be nice to have an option to say, hey, I don't want this tax deducted off or this tax off my paycheck every single week, and I'd rather have it be responsible for that money myself and then not receive obviously, with the intention of not receiving it down the road. Right. I wish that was an option for the younger generations. Obviously, that's not going to come true, but we'll talk more about that. Yeah, well, it's I mean, there's so many statistics behind it, but the cracks in the system right now are in these are just approximate numbers. But around 75% of Social Security is paid through payroll tax, through fake attacks. The employer and the employee both pay this tax. They both pay approximately 6.2% per side to have a nice 12.4% contribution towards Social Security every year. The other 25% comes from a trust fund that the government, you know, has built up over the years. But I mean, it's not even been it's being depleted and and the recent numbers have been, what is it, 20, 32 now? 2034, 34 now. Okay. The number keeps on changing. Good, bad and ugly. Maybe because of higher interest rates. Maybe it's surviving because the government prints money or trillions of dollars and pump a little bit more into the trust fund. Maybe. Maybe. But so roughly 25% comes from this trust fund that'll be depleted within approximately ten years. The question has always been like, okay, what happens next when that when that happens, what do we do? Because this isn't, you know, with everything going on today, you know, international wars, you know, the United States taking their nose in all these different geopolitical issues, it's a very back burner thing, especially with something with a ten year time horizon. The government typically looks ten days ahead, you know, like we're the time of this record and we don't even have a speaker of the House in and they can't get that stuff right. Right. So, I mean, this is ten years away, so no politician will touch this topic with a ten foot pole because they don't want to ruin their political career because they said something wrong at the wrong time and saying, hey, to fix this, we have to charge you more money or you have to pay higher taxes. No one's going to no one's going to bring that to the table. But we'll talk about some of the solutions for it and go from there. So let's start with a stance, maybe a stance of when Social Security was even created. Yeah, Yeah, I got some historical data. So 1935, FDR actually signed this program into existence. Right? And it came online in 1948. The first check was cut. And just to put it into perspective of why we are at where we're at, at that time, life expectancy was around 60 years of old, so it was 66. You guys are getting that back in the forties. It was six years old. Was the when you were at birth, if you're born in 1935, that was. Wow. Life expectancy. Today it's what, 85 more. 80 to 85. Yeah. And so, you know, at the beginning years, the system was actually overfunded because by the time you were eligible for benefits, you got a paycheck and you died. You paid into the system your whole life and you never collected any man. So it's kind of reversed. But there was there have also been a number and series of changes over time since inception that put more pressure on it, including the ability to adjust the benefit for cost of living. Right. Yeah. So, you know, that first came into place in 1970, 1950 was the first COLA adjustment. Okay. And until 1975, it actually required a Congress approval to get the COLA. Now it's an automatic. Automatic. Yeah, and we'll talk about that. And that's one of the things back in the day, like it actually required Congress approval. So a lot of that, it's kind of building into what we're talking about today. That's why the system is under so much pressure. Well, and then, you know, one of the other statistics is that Social Security helps prop up the people that just, you know, either haven't saved or or just were never high wage earners in it and it thrust them out of poverty level. I believe the statistic it helps like roughly 30 or 40% of seniors get out of poverty. And then, you know, looking at through that stat and reading through that article, it blew my mind. Two out of five people have $0 save for retirement, not a dollar. And then and then the other the other statistic I found fascinating is that only 10% of retirees have over $500,000 save for retirement. That's just, you know, for just not saving enough money. It also one thing I want to point out is how different the world was on kind of days point, not only on the age standpoint, but the type of economy standpoint and how productive the U.S. is and how innovative the U.S. has been since that time frame. Right. So back in the day, it was manufacture in thirties, forties, coming out of World War Two. It's manufacturing jobs. Right. And we sold those to other countries. We sold it obviously to ourselves here in America with the technological revolution, it really up to the middle class to where the middle class came out of poverty itself because of power, capitalism, power of innovation, and because of that, it allows the person themselves to decide how they want to spend their money, where they want to save their money, if they if they want to save money or they want to go spend that money. Right. So the problem we're dealing with in today's world when it comes to Social Security a lot of times is the opportunities out there are a lot greater than they were in the thirties and forties. It gives you a choice of saving your four one K's into your IRAs. The problem is now in America is no one wants to take a step to go ahead and actually save. They'd rather go out there and spend the money. So now they're relying on Social Security still when in fact they actually had opportunities for 30, 40 years now to actually put money away and therefore one case, IRAs and other means. So the problem is, in today's world, you have more freedom. Actually to spend money on what you want. The people aren't spending on the right things. So now they're complaining when they don't have enough money and rely on Social Security more than they should. And look, I feel like you may have answered your own the question that you posed earlier about like privatizing Social Security, opting in or opting out because people are bad is the reason I you know, Tony just said it. Yeah. Two out of five had $0 in retirement savings. Do you think that people that are you may dupe be more effective with saving it, but the median should be a lot more effective. The median person is just going to not save a dollar and then they're going to have to get bailed out in the back end. So it's probably not practical. And you know what? So, like, I'm I'm really looking at, you know, a lot of things pop in my mind is that, you know, again, 75% of Social Security benefits will always be paid because we pay working people pay into the system. It's the payroll payroll tax, the fight, the tax. So maybe we'll take a 25% pay cut, maybe we won't. But the cracks behind the 75% because the cracks the cracks under 25 are obvious. They're running out of money and something needs to be done. And we'll talk about those solutions. But like, what about the 75%, the payroll? Like right now, Employment's low, everyone's employed or essentially, you know, we have we have historically low unemployment rates right now. What happens when it spikes? That's pressure on the system. That's less money being paid into or help paying for recipients of Social Security. The other thing is, is I found the statistics 10,000, 10,000 baby boomers are retiring every day in the United States. So that makes that puts us at 3.6 5,000,000 million people per year. I could not, for the life of me find how many people are entering the workforce not looking for a job. I'm talking about like getting their first job ever. I could not find that to save my life. But my my, I'm thinking because we're so there. There's obviously obviously more baby boomers than people being born today. Right. That's why they're called the baby boomers. There's we're not we're not producing as many young ovulation claps. Right. So Elon Musk is one of the biggest. Yeah. And I'm worried about it, Frank. I mean, I mean, I'm kind of worried about like, okay, there's 3.5, 3.65 million people retiring every year, but there's only 2.5 entering the workforce every year. Plan does go like the whole Bernie made up. So it's like that's just going to be less people paying into the 70 plus people. It's not a problem in that probably the next ten years, but it could be in the next. I don't know why, but I like where the Ponzi scheme, the demographics are, but I guess not in our favor. Yeah. So as long as unemployment's low and, you know, hopefully people are entering the workforce, you know, because I believe the other thing that blew me away is that youth, I guess they don't like to work, you know, that that 16 to 24 section they don't like the age from like 16 to 24 Their their work rate, the people that have jobs is like 55 ish percent plus or minus, where I believe 65% of the total population of the United States is working. So like what's happening with those young people, That's a that's a different conversation for a different show. I know what's happening. Oh, boy. Here we but we're not going to get to that. But what I will say on top of that is the whole prospect to me, I you're talking you're talking a lot about unemployment and unemployment. I brought it up multiple times with technology. I if it increases a systematic unemployment rate, if there's more people unemployed because technology is replacing jobs, not creating new jobs, that means less people paying in the system. So that comes into question UBI, universal basic income, things like that. So other programs might be created on top of Social Security, but where does that money have to come from? It has to come from either the people working. Yeah. Or has to come from you know, I saw that, I said that and I'm sure like that's been in articles like I will deplete jobs and it will destroy jobs. So well, automation, COVID, like, Hey man, we can't make cars because no one wants to show up. Okay, we're going to build a robot that can right now, that robot does that robot doesn't need to pay taxes. Right. And but there's going to be somebody, one or two people that are not working because of that robot, because can do it more efficiently. It's something that we have to pay attention to as technology continues to advance. Yep. So guys, what are some of the fixes that can help to get there that can help plug the gap here? Right. I've said this a few times and I think it I think it makes the most sense. So it's paying for Social Security through payroll tax. I mentioned it before. Fika is the it's a Social Security tax. 12.4% is paid. Usually 6.2% is paid by the employee and 6.2% is paid by the employer. Thanks for funding my Social security. I'll never get right. You will because it's paid through payroll. You just might not get 75%. You're definitely not getting that 25%. So but what what what really happens is that they have a cap on how much you make. So if you make the cap is 100, $160,200, once you hit that threshold, you don't have to pay into Social Security anymore the rest of the year. For the rest of the year. Correct. Thanks for and Dave since Polis enough the back end of all of my comments I love it. That's why my read here I am just polishing up so the two easy fixes to this solution because we pay through payroll is a you either raise spike a tax from 12.4% which has been talked about. It's amazing it to like 1416. It's an incremental amount but it goes a long way. The other one is you just remove the cap. There have been talks specifically from the you know, the the I'd say the far left side is saying, you know, like the Elizabeth Warren's and was it Bernie now or Bernie Sanders of of getting that up to like the for a $400,000 income threshold and this is essentially a tax on the rich and it's a socialistic kind of mentality I've seen to two solutions proposed one is raising they call it smash the cap. Yeah raising the cap from 162 to 50. So the first 250 K of earnings would be subject. The other one is keeping the ones 60 would then reapplying that deduction. Once you hit four and up. So I've seen it sliced and diced too. Well, okay, so you've seen it where it's like you get to 160 and you don't have to think about that whole. But once you are donut hole, I like that donut hole. And then once you get to that 100, when you get 400, then it turns out what it was. It was surprising. Like on that second one, the one where there's the gap from 160 to 400, it was surprising that move alone based on, you know, who know most of these numbers are correct would fix 60% of the problem so that it seems like there are some incremental changes that move the needle quite a bit. Here's what I would like to see almost is I mean, okay, maybe I shouldn't even talk about this yet. One thing I kind of thought about is what if there's like a marginal tax rate applied to Social Security? Those that need Social Security the most are those that are in the lower income brackets because they're not able to pump away as much money. Correct? Yeah, that's coming up. So that's the mean. They're talking about the means testing of it, Right. So what if there's a marginal rate? I got to comment on that too. Sorry. There's a marginal rate applied and then it phases out for income. If you're above a couple hundred thousand dollars of income, maybe if they. Yeah, that's one of the other that's one of the other solutions that I, you know, that I've come up with is that the high talk. Yeah. It's a so a lot of the stuff like though the one article that we were that we were taking a peek at was they were starting to then show the I guess the bipartisan support Democrats and Republicans for all of these ideas, the ones we just talked about, Social Security tax, donut holes smashed, the cap rate spiked like that's the highest conviction across both both sides of the aisle. And it's like 80, 90%. It's very, very high. So that is most likely what is going to happen. It is the less in, I'll call it less invasive, but it will unless you're checking. But unless you get a group. Right. Right. I mean, if you're a higher income earner, you're definitely you're going it's a rich it's a tax on the rich. Essentially. You make a lot of money. You're going to get hit with this all this time. Right. But to solve 60% of the problem, you know, it's like that. You know, I'll say it a couple of times. It's like a Robin Hood benefit. Yeah. So. Yeah, but 61%. But what happens with the other 40, it's so like instead of instead of the the instead of the trust fund running out in ten years, what happens and runs out in 16, you know, like what? So it's not a it's a solution. It's not the solution, right. It'd be part of the solution. There's and then there's other ideas that would help bridge the gap. You know, one of them being talked about most commonly is further extending full retirement age for the younger workers. So let's talk about that because so the one the one I want to I want to get to the full retirement age. But right before that, like we all understand that you can start Social Security at 62, but every year that you wait, it goes up 8%. But they penalize you. It's not just like, hey, I turned 62 and I get to turn this on and work. They will they will dock you your Social Security. So, you know, in 2023, if you make basically over 21 grand and you're working full time and decide to turn on social Security, they're going to take a dollar away of your Social Security for every two you make. So eventually, you know, if you're making over 60 grand, they're just going to you're going to turn it on. They're going to take it. All right. The basic kind of back of the envelope math it is, they claim that they adjust your benefit in the future at full retirement age to make you whole. You know, how long if you live to get all that money back, Right. That's the thing. You're going to have to wait to get all that money. They're not going to write you a check. Everything that they took from you on day one. Yeah. So that's the one. So now that we're living longer, what? Why, if they changed the age 62 to like 63 or 64, 66, I don't is why isn't that as big of a solution. I mean it's going to that that would probably pencil. You were saying that the earliest age you could start it Yeah change uptick that since we're quote unquote living longer now instead of you're able to turn it on you can retire at 62 and turn on Social Security. Yeah. Why not turn it? Why don't you say you can't really turn it on until 60? Well, I think the argument there would be the break even point on starting it early versus full retirement age is right around age 82. So in theory, a big group of people starting it early, you're going to be in the same point. Why? If they were if they started earlier, waited until full retirement age, if they lived to their day. Okay. So okay. So based on the the the law of large numbers. Yes. You're saying like, hey, you're just you're just delaying it a few years. Yeah, right. Because you're going to get a higher amount. But what if you're moving that the goal line from 67 to 70 in terms of your full retirement age benefit, you just straight screw those people for three years. Right now you have to wait three more years just to get the old amount. David, explain. Explain to us what like full retirement age really means, because if I can start it at 62 and then it got this fancy timeline of full retirement age at 67, what is that? When they when they calculate your full retirement age benefit as a retiree, they're using, you know, an age of like for most people are between 66 and 67, somewhere around there. That's when you would be eligible for your full benefit amount. You see in those statements, right. If you start your benefit earlier than then, you can, you know, up to age 62, but you're going to take a haircut and it's like 7% a year or something around that each year that you started early. So so if I start at 62, I know it goes up 8% every year, but that 67, does it really escalate higher? Is that what you're from? What setting in? I started me starting at 62 versus 67 was called full retirement age of 67. Is there a huge jump between like 66? I'm 66 and waiting till 67. Then I see an incremental jump above 8% or not really. No, I think it's it's linear. Yeah. So that's why I don't understand. Like they have a fancy word for retirement age and but I can start at any time I want. And and in full disclosure, we tell most of our clients, not all of them, but most of them to start Social Security as soon as possible, as soon as they retire. Right. Not while you're working, but when you retire, because we don't know what's going to happen to that, that back end, that 25% or, you know, the solutions we're talking we don't know when they're going to come into fruition. I want to hit on the age thing real quick. Again, if they do push it back, my only concern is, yeah, that's been a great advancements in technology. You know, biotech and medical advancements and people are living longer. But like past two years we've seen the first like take downs and people living longer because people are actually getting unhealthier now, because whether it's the COVID, you know, people staying in drinking and or nicotine or, you know, eating fast food every single day don't reach their house every day. I don't know why operation, but people are getting lower, low and healthier. Yeah. So if that's the case that people actually I don't know. I think we're living longer because of McDonald's. You know how many preservatives are in that man? I am. I am becoming of a fossil in front of your furniture. I look, I think I saw some stuff like post-COVID. It did tick down like 30 years. But I we'll see what happens in the trend like as we you know this normalizes. Yeah oh no people are going to live to 95 100 years old every time you know. Right. So so this is where I've always struggled with Social Security is that like I don't understand the whole full retirement age deadline other than the fact that before 67, if I start it, I'm going to get dinged. If I make too much money, they have their pullback provisions. And once I hit 67, let's say I'm 68, I can turn on Social Security and work full time and I have double income now. I stopped the 8% growth every year, but I don't get that. I don't get the pullback provision. They don't like when they're going to they're going to take me. And I think being on the other side of it, I would say the incentive is they want to delay paying the benefits out. They want to incentivize people from starting it early through. So, okay, so then they're moving to full retirement age. They want to like move it from everything 67 to 70. Still, like if you're 68. And that in the scenario I just built, like if I'm 68, they're still going to pull money away. They don't want me to double dip work and get it right. Is that that's that's how I would read it. Okay. That's okay. I like that makes sense to me. Moving that to age 70 makes a lot of sense. Like you're always going to get penalized up until age 70 then. I like that. Like some people might not like it, but the younger yeah, we're trying to like, solve the issue you know, stomping on the the the loopholes that they have. I just think there's too many moving parts to to the Ponzi scheme. I think there's too many what if scenarios for the government to really handle this perfectly. I think what maybe what will happen is a potential solution is everything we're talking about is making it more simple. Like there's instead of 62 to 70 turn on, maybe there's 166 or 67. That's the time you can turn it on. They do away with if you're still working, you just get it no matter what. There's to me what if scenarios. I think for the government to actuarially plan around sometimes, especially with the changing population, changing information, changing data that would set up. You know, I just think there's too many moving parts. I think it's possible the next ten years it gets a lot more simple. I can't disagree with everything in our whole tax system is most complicated thing you can think. I usually don't simplify things. Yeah, now they make things layer on layer of bureaucracy to make it more confusing. But just staying on the part, I think like if they were to move it to 62, I mean, Dave, I hear your argument like, Hey, you're just you're just going to pay them more later and we're living longer, so it's not going to work out. But I think moving the full retirement age to from 67 to 70 makes sense because now you're just going to these, you know, take away the fact that people that are turning it on at 68 and working full time and getting that one. I think Tony, the other piece to that is their the benefit they promised these people at age 67, they move the goal line to age 70. So you just lost three years of increases, Right. Know your benefit margins lower and just lower you. Well, they can just count think it's just they can't. So that's how they're going to be able to say giving you less money. Yeah. All right. So they could tinker with the age There's there's high again there's high bipartisan support for this idea too. I think this is going to be harder to explain and it's going to piss a lot more people off, taxing more people. They're going to they're going to gripe. They're going to complain, but they're going to move on. If you start messing with the way people are getting their money, you have going to see revolts in the streets on this one that if you mess with the age time, usually what they do is they'll implement these changes for people that aren't collecting yet, Right? They don't want to. They don't the people that are already grandfathered in, the younger generations are the ones that are going to feel that you don't have the burden. You got to live look your best. You're in bad shape between the boomers, you Gen-Xers or whatever. You guys are millennials. I don't know. It just gets pushed on to the next generation. Next year. I'm I'm right on the edge. Gen X Yeah. You know, and that's the story of American Today's. Well we talk about all the time It's just I'm the Gen Xer that actually knows how to use technology somewhat. So here's the difference. It comes back. I'll go back to World War Two. I don't think I said this yet. Social Security is created right around World War two, 1935. You said, and I think it was actually reimplemented. There was like some during World War Two, they kind of did away with some things. I think they came back in 1946 and restructured some of the Social Security. The difference was in World War two, our debt to GDP was 120%. Now we're at 120%. That's GDP. The thing was we borrowed all that money back and over to things like Social Security, government programs, things like that, and all the wartime spending. We were able to grow out of that debt because our GDP increased so much, we were able to innovate. Now we're at the point we're still at 120% debt to GDP. We're back to that World War two levels, but we're not in wartime. The question is, is are we going to be able to grow out of this kind of debt? Are we going to be able to add GDP without, you know, necessarily decreasing the debt? Because we can't we can't expect the government to decrease that. These are things we've got to think about is in terms of productivity, when people are asking for three or four day workweeks, you know, when people are asking for 50 days of PTO working from home, all this stuff, you know, then the question comes these government programs like Social Security, like people don't think about the impact of what lost productivity does in a society like we currently have. It just things we got to think about. Robots don't pay taxes. They might like to go to work and we get replaced by a robot. They don't pay taxes. I think it's actually no, I wouldn't say it is. Real quick, I want to get to cyberpunk I cyberpunk on you, but I think it's potentially possible that if we do go down the UBI route of like systematic unemployment rises, it's a conversation we have to have that technology actually sees some sort of resources or income and distributed pass, you know, somewhere somehow to us gets passed along. I think it's possible that robots will actually pay taxes in 100 years from the employer who built the robot has to pay an additional robot tax. Yeah, there's not robots that make sense. Our engineer was talking about how the British what is it, England. British? The British pay taxes to own a TV. That's just the layer taxes of BBC, BBC. You know, we became exactly what are the British we got away from? You know, you came back to the same spot that we revolted back and said, since we don't drink tea anymore, we can have a Boston Tea Party. We're going to have the the the Cleveland Energy Drink Party that we drink tea, cups of coffee a day at the coffee party. All right. Anyway, so the next part was to fix the cola part, the cost of living adjustment. So last year, in 2022 was the record COLA adjustment for Social Security was 5.9% of everyone got a 5.9% raise in Social Security. Oh, you're you're missing one the next year after that was 8.7. Really. Yeah. So there's been some some some good come, come and go to pump some good bumps raises. I've got 5.9 and then 8.7. So Luke, turn time. This is putting more pressure on the system. Right? It's inflationary. Do you guys get an 8% raise? I don't know. Maybe. Maybe I should start talking privately. That is unsustainable. Yes, you know, but there but you know, we've all, you know, 5.98.7, you know, let's call that in a compounding basis for what maybe 18 to 20% is what you really got when everything else around you is up 60%. Okay. Well, anyway, but that needs to they can't go up that high. That is unsustainable, obviously. I think in 2024 it'll be a lot lower. It'll be more like two or 3%. But they were talking about it. We're talking about changing it from, you know, from the like, what are they using right now? Because the CPI, CPI. Yeah. Or the derivative derivative of it and, and they're talking about changing the derivative of how they calculate this. So guys, this is all a numbers game. But, but also remember, social care. I know it's a numbers game, but remember and Social Security wasn't wasn't growing at all because RPI was zero for 2021. It was 1.3. What's the increase? Yeah. So it ebbs and flows with inflation. Like, that's the whole point is you're keeping up with buying the same basket of goods in theory. Right. But all the stuff that I'm hearing, it's just like, how do you want to change the formula for the payout? How do you actuarially make this work? Well, well, so you're getting into the same same thing. It's just one of the solutions. Do you want to if the bandwidth is 0 to 9%, why can't we just call it two and having a linear inflation? One of the ways it could be because when you go to because it can leave you a giant eagle in your blood for bread, it's $12. Simple. It's simple. Let's make it simple. Example, let's call it. But what if we just said, here's one of the solutions instead of changing everything up, one of the simpler solutions that we haven't talked about is right in front of our eyes. What if we just stop the colas for a couple of years or ten years or so and we kind of grow, ah, so we're going back productivity out of it? Yes, the math of it would help, but you've got a large portion of the population that's relying on that income to keep their head above water. So that's the problem. What if you have a deflationary, let's say, two years from now, there's a big recession, Let's say next year, some shit hits the fan. What happens then if you have a -2% inflation, are they going to reduce your benefits by 2%? Absolutely not. And that's I mean, that's a conversation. Austerity is the answer to some degree. You're like, guess what? You might have to cut back your lifestyle. But right now no one wants to hear that. At least with the least, if you had a like, it's very hard to swallow up 5.9, 8.7% increase on the at least the government side, it's that's a hard that's a hard number to swallow if you can. I know we're not I know that government's not a bunch of planners, but imagine if they were like, hey, let's just make this a linear 2% every year and everyone knows what they're going to get. And we need to we'll know what we need to calculate for, you know what? Not not just a 9% bump in like, oh, geez, that that one's going to hurt. I watched the movie like, about John Nash yesterday. First time scene. That's a good movie, by the way. He's like a famous mathematician, had schizophrenia. But anyway, great, great movie. You haven't seen it. But anyway, I don't know why we don't have these advanced Ph.D. mathematicians. Smart minds in here just kind of go around, say this is here's your options, this is what we need to do. If we don't fix it soon, things are going to implode. Why don't we, like, put more emphasis on focus as politicians think that exists? The problem, it's all political, right? So it's all politically driven. And who it's all about power, right? To get into power, you're going to pander to your audience to get votes so they know like the math of it and the solution. But that's not necessarily what they want to do. Yeah, the COLA part is, I don't know. They need to probably fix that. They can't. They can't. It's unsustainable to get 9% bumps in in a particular year. But that's that's one of the lower ones because again, they don't have that they don't have mathematicians to really figure this shit out so or they do but they don't they don't want to use they don't want to use them. Right. You're going to keep them in the in the basement locked up, you know, keep them locked up. The last one that we'll talk about today is reduce the benefits of high earners and, you know, and also parlaying in asset levels. They're going to figure out and do you really need this money or can you have you done a good job and, you know, penalize penalize the, you know, the capitalists of the world? I guess, you know, that's up your alley, look like, hey, I was successful and I'm going to get dinged for it. Yeah, it's 100 it's Berardi yet. And that's why Luke wants to opt out. We're going to go more socialistic and communists in my lifetime. We will be more of a socialist in communistic country. There's no doubt in my mind about it. Yeah. I mean, no, this is the problem with the precedents we've set in the systems that we put in place that we just let go for years and just try to build out everything a year after year after year. Yeah. And this is you know, this is why geopolitical conflicts are a question mainly. I mean, the biggest thing is, is that so they call it they're referring to this as like the means testing. You know, they're going to have you I don't know. This is this is in the infancy talks, but it could possibly happen. This one's the one that could happen. And they're already talking about, first of all, like, you know, if they do a means testing, these are the people, the people that are going to get the highest benefits have paid the highest, the most into it, and they have been the highest earners. And they probably did save for retirement and they're going to be doing a robin. It's like it's like a double socialism. Right? Right. You paid more into it and you get less. The only way the only way. And here's optimist. I'm maybe optimistic. Oh, okay. Here we go. I told your sister. Yeah, let's go, Luke. But the pendulum does always swing from one side to the other. And the optimism, he says, is long as all three. This is the, like, the only way this all works, in my opinion. If corporations, governments and consumers all come together and say we are going to become fiscally responsible, then we'll be able to have deficits. We'll have to have we'll have to have less deficits. We'll be able to reduce our debt within the United States, personal debt, corporate debt. We'll be able to then grow our economy outside of that, to get back to it. Nice, capitalistic, innovative solve. The problem is we're gonna go through a lot of pain with that. And the question that we have to ask is people, corporations and governments are going to be able to go through that pain and be able to suffer through that for a couple of years, maybe even a decade. That's that, in my opinion, is the optimistic side that we will come out much stronger and better in the end. But the problem with that is people aren't willing to go through a little bit of pain to get outside of our spending and debt addiction. That's that's the optimistic perspective. Yeah, I don't know what that would mean. It's very it's a tough pill to swallow for a lot of people. Right Right there used to. But I mean, if you hear a lot of the you know, you hear a lot of the politicians today, America is suffering. America is suffering right now. Right now. Why would we want to make them suffer even more? Luke That's a great and that's they say it all the time, but people, when they realize have low unemployment and because without that driven yeah it's, it's it's they need to have I mean the only state you got to go back to is 120% that's GDP. Let's get that let's let's get back to like the you know banging on the the the the high income earners and assets the way they're looking to do this because this is what I've heard of this and this maybe study into it is that they're looking to have a 10% reduction of your benefit for every dollar you make over 40 grand and they're calling it income. Now, my question is, is like I get pensions, like the pension, A pension is an income, right? And and if you have a pension, you're one of the very few. And you're lucky, you know, and you've worked for it and it's you know, that's great. They're going to deny you for that. Now. Okay. All the money that you pushed over there, they're going to take it from over here, essentially. And now my also question is like, okay, what now? What about the income? Like, are they going to look at I.R.A. distributions as income? Because, you know, like because again, they're going to try and penalize the people that have saved. And if you saved, you probably saved in a qualified plan like a401k4 or three B, whatever it may be, get your tax deduction now. Now that you saved all that money, you k that you have to take it out. It will you will be taxed. Is that is that a form of income? I know you pay taxes on it. So it comes down to which senators friend needs the solution to work. Right. And that's all be your answer. But I mean but isn't that crazy ten $0.10 for every dollar you make. So I mean, if you have a large pension and you saved a lot of money in your lifestyle's kind of big, you know. Yeah, you have a nice spending budget in retirement and that might you might get dwindled down it. It's par for the course. I mean what's the latest stuff that's been happening like higher mortgage rates for people with better credit scores. Right. It's all backwards, right? It doesn't necessarily make sense logically, but you can the source of the money has to come from the people that have the money. Right. You can't tax the people that don't have any income. Right. So that's that's not fair. But that's the logic of it, that this one's going to be very hard to implement because it's this, again, a layer of complexity is that this is the one that's going to be very difficult. It is being talked about. I don't know how they're going to fix it. Yeah. So that this one I'm I'm more I'm in it. It's intriguing because it's going to affect a lot of people. Yeah because 40 grand in retirement I'd assume is not you know that's not a lot of well, especially if you still have a mortgage payment or rent and I think a big difference to compare it back in the economy back in the forties and fifties is that you the American dream is to buy a house and pay it off over time. Now, how many retirees don't have actually own their house? They're still renting in some sort of way. That's a big difference too, I don't know to start off the top of my head, but I think that's something we got to think about, too. Where the money is actually going is it going to rent food? I mean, it's basically Social Security and to become like a food stamp program, I don't know. Yeah, but something to consider that the biggest thing to roll down, I mean, it could be implemented with one vote and two, the answer is like the Social Security payroll tax that that is the easiest fix. It's the it's the easiest one to pass. It's not overly complicated whatsoever. You just raise the like a tax and you you bump up the, you know, the threshold. Let me ask you guys, what's the impact of that on the economy outside of Social Security? Well, I would assume that's a good question. I assume that the more money you have, the more money you spend. That's the American way. Yeah. You know, you you spend what you make. So now if you are taking money out of the people that make the most money, that that's just less for them to spend. And they'd normally have just more money spend. So this economy is built on us spending money so it's not paying taxes that the whole philosophy of. Remember Trump during Trump time, we had the highest tax revenue in history, but we also with lowest. Yes. Is that kind of the same concept? You raise taxes, but you actually get less tax revenue or Social Security revenue? Yeah, I mean, you could you start because start crushing economic growth, because the money's not going to the mom and pop shop down the street or, you know, other, you know, even a big box store. It's not going there. It's going to the government. Exactly. So more taxes does crush. So maybe it's a short term solution, but oh, it's it's definitely a short term, right? It definitely a short term. Raising taxes is definitely a short term. Yeah. You know, a short term resolution, guys, one thing I did want to circle back, I always give you a planning and this is the banger is this this is not the banger. This is the planning angle. So for for our clients who have gone through the planning process with us, we want you to know how we've dealt with this gap, right? So within, you know, within our plans were Social Security income. We talked about the inflation, the COLA, right. On a go forward basis, we're modeling your benefit increases by 1% per year in your plan, Right. Even though we got a five and a nine, you're getting a one in your plan, Right. So what that allows us to do is be prepared for if you do take a haircut in the future, it's going to be offset by the fact that we haven't grown your benefit in your plan as much. So there are your plan knows that this could be coming right. And what that means, like when we look down the road, if we grow it at 1% versus, you know, an actual growth of 3%, ten years out, we've accounted for an 18% reduction. So it's kind of in line with what could happen in the worst case scenario. Right. And inside our plan, we have built in other conservative of assumptions. We have most people living longer to age 95. Yep, we have lower expected rates of return from your investments because if we take a look over the last ten years, the market's up probably what, nine, 10% per year? Yeah. And when we build your portfolio so at six and your assets grow more than that, your plan gets better. Yes. Right. So there are different layers of conservatism that we have that we build for our clients. The 1% increase, obviously, when you get your plan refreshed, because that's another thing we like to do is we'll update the new numbers. But on a next year, it's at 1%. Again, it's at 1%. So there's we like to build because we're aware of this stuff, but we can't just built hey, we think they're going to you know, you're going to miss out on 25% of your things. So we're building your plan that way we can build a scenario like that. Well, what's but we don't know if it's going to really happen. Yeah, we don't know if it's going to happen. And because again, the runways, ten years till this thing runs out of money. Well, that's what's cool is like, you know, everyone the team we rebuilt here, like the investment guys have, you know, we have the philosophical kind of macro guys that come in and talk about what if scenarios could happen. The planners plan around that, the investment team positions around that, how we manage risk. It's kind of cool how it all kind of comes together, right? The different philosophies and what we're paying attention to. Yep. All right. Well, that's it, guys. I think we we covered it. So the canceled section of our thing is not Social Security. Not yet. Not yet. It's on the docket, but it's not canceled yet. And even if they did run out of the trust fund, you're still going to get 75 to 80% of your benefits based on the way that we pay our current payroll taxes. The people working so it doesn't just disappear. I just send you guys a check for the money I'm paying, so I'll gladly take a check. Why don't we start now? Let's start now. Archive the tweeter. Let's start now. I'll give you my. And you don't even need to write a check yet. I'll give you my Venmo account. I better get my check So, you know, I'll use Venmo, PayPal, whatever, whatever's convenient for you. Right. All right, guys, thanks for listening. I hope this was insightful. We were kind of, you know, thinking about how how we plan around it. I know it was towards the end of this program, how we plan around it, but these are some of the things that are going to happen and trying to kick out the life of Social Security and make it last longer. So with that being said, if you have any other questions or suggestions, suggestions on future shows, things that are happening, you know, let us know. We'd love to come up with, you know, other topics like this and you know so send us and thanks Dave you know or happenstance always thanks for digging deep with us. Happy to be here guy Yep. So what would it would be at info at WP Connect if you have any suggestions on the show Twitters or to Tony's Twitter the way I might drop a dime. Right. That's our fancy that that that fancy lingo drop at the right slide in the 90. All right, guys. Well, thanks for listening. We'll we'll catch up with you next week and we'll go from there. Have a great day. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.