• Kelechukwu “Chu” Oparah

Rules of the Game: Part 2 of 4

Social Security



In college, I had the opportunity to be part of a unique intramural group called the Martial Arts Club. As the name would suggest, students and faculty who wished to expand their skills in some combat tradition would gather two evenings a week and train with one another.


Often, this involved a memorable experience of two practitioners of different styles coming together to practice. And while human mechanics don’t really change much, the guidelines governing each person’s practice have huge variations.


In these cases, it’s pretty important to take that time at the beginning to align expectations. Otherwise, you end up with two people training together based on two different sets of rules.


Every once in a while, someone would come into the club and ignore the basic convention of clarifying rules. Those were bad nights. There’s precious little humor left in even the nicest person when fielding an elbow to the ribs without consent. Oddly specific? Perhaps.


Last week, I introduced the idea that the rules of financial independence have changed. Unfortunately, most Americans never had the opportunity to match expectations with the new rules. The result is most Americans having the perpetual “bad night” at the Martial Arts Club when it comes to their finances.


Part 1 of the Rules of the Game series was all about pensions, the incredible impact they had on the economy and how their progressive absence has put immense pressure on the average person to acquire financial education in order to develop a strategy.


So what’s next?


SOCIAL SECURITY


Social security affects every American, yet we learn so little about it in school. It was created at a time during the height of the polluted, industrial revolution. The life expectancy was just 58 for men and 62 for women. Consider then that full benefit age was set to 65, a whole 3 years after the end of life expectancy.


Social Security was sold to the country as an insurance policy to protect vulnerable, elderly people who lived longer than life expectancy. It was not built as the retirement income it attempts, albeit badly, to be today


With a current life expectancy at 80 for women and 76 for men, the problems with Social Security were perhaps baked in. Without a provision to adjust benefit age with the average life expectancy, the program was locked on a course toward unsustainability at its birth.


In the ‘60s and ‘70s when life expectancy started showing signs of going over 70, our country started becoming very dependent on the program. So many retirees were receiving it that the economy started building in that extra income and marketing the experience economy to retirees who were healthy enough to enjoy cruises, casinos, fishing rods and golf clubs.


Unfortunately, both the pullback of pensions and the increase of life expectancies couldn’t have been predicted. An unpredictable elbow to the ribs, when the rules of the game shifted.


In the beginning of the program, there were 49 workers paying in for every one person receiving benefits. Now, there are 2.7 workers for every one person receiving benefits. Add that fact to the nearly $200 trillion of unfunded liabilities on the government’s federal ledger, and we arrive at the massive rule change. What used to be there for people in the 80s in the form of Social Security income won’t be there for you.


We’ve another unexpected roundhouse kick to the jaw. This fight, without a conversation upfront, can not be won. This fight, with the benefit of preparation for the unexpected rule change, can absolutely be adapted to benefit your style of combat.


Over the next 2 weeks, I’m going to be going through two more primary shifts to the money game over the past 80 years. Check out last week’s post for part 1. I go as far as I can in these articles, but for a holistic picture on this and a few other topics, hit me up on social media to secure an invite to our, “How Money Works Masterclass.” It’s free of charge. It’s virtual, and only an hour. I just ask that if you find it valuable, you tell others, so we can all grow together!


Kelechukwu “Chu” Oparah is a Licensed Financial Professional Serving your Dayton Community. For more content, Chu is on Instagram @chuoparah.

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