Reply #115: Well I am not sure why you called it bullshit and then said the same thing as me. [View All]

None of the commissions proposals are massive. They are just to close that $5.4T gap. While it may be 1 penny on the dollar that is IF we pay $5.4T up front today. That is how unfunded liabilities are calculated. As time goes on the effects of compounding interest take over. So the liability will grow slowly at first but accelerating as we approach 2043.

We need to slightly boost revenue and/or slightly cut expenses. The sooner we do it the smaller the change will be. Nothing in the comission report is particularly dramatic. Of course if we wait 20 years the next commission report will be far more dire. If we wait 30 years the changes requires will be even more significant.

Compounding interest is a powerful force.
Imagine you need $1 mil to retire and are 40 years from retirement. If you can assume an 8% return you need to put aside $322 a month. However if you are only 20 years from retirement you can't just double it. It would take $1825 a month with same 8% return. Now if you waited till only 10 years before retirement to start saving you would need to put aside a staggering $5760 a month.

With half the time the monthly "cost" has increased not by a factor of 2 but a factor of almost 6 and with one quarter the time it requires almost 18 times the "cost".