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Will Being Ordinary and Average Hurt Social Security?

Will Being Ordinary and Average Hurt Social Security?

August 21, 2023

Ordinary Average Guy is the ninth solo studio album by Joe Walsh. Joe spent part of his childhood growing up in Columbus Ohio and also attended Kent State University, where he played in several bands around the Northeast Ohio area.

The title song tells the story of a man and his friends getting older. They are no longer the young, brash, and hip dudes that they were during their late teens and early 20s. A YouTube link to the video of the song is included below and I will share the song’s lyrics throughout today’s post.

Ordinary Average Guy Video

Ordinary Average Guy

Song by Joe Walsh

I'm just an ordinary average guy
My friends all are boring
And so am I
We're just ordinary average guys

It looks like much of America is aging right along with Joe Walsh and his Eagles bandmates. According to Vintage 2022 Population Estimates recently released by the US Census Bureau, the median age in the United States has reached a record high of 38.9 years old (remember that median indicates that 1/2 the population is older and 1/2 of the population is younger).

This trend has been steadily moving higher over the last 40 years. In 1980 the median age in the United States was 30, as recently as the calendar year 2000 and the median age was 35. it is also interesting to know that next year we will have more Americans turn age 65 than at any other point in our country’s history. 

We are still younger than much of the rest of the developed world. For example, the median in Europe is age 44 and is also rapidly moving higher. However, we know that declining birth rates over the last several decades, along with our graying population, will continue to put stress on many facets of our society, not the least of which is our foundational Social Security and Medicare systems.

We all lead ordinary average lives
With average kids
And average wives
We all go bowling at the bowling lanes
Drink a few beers
Bowl a few frames
We're just ordinary average guys
Ordinary average guys

The Congressional Budget Office, CBO projects that over the next 30 years, the number of people age 65 or older, and thus generally eligible for Social Security and Medicare benefits, will balloon to 73 million people. This is more than double the average number of people in that age group over the last 40 years.

This means that the number of retired people no longer paying FICA taxes into the Social Security system will increase from 1 in 6 people currently to 1 in 5 people over the next 15 years. With fewer people paying in and more people taking money out of our Social Security system, there will continue to be funding strains until this is adequately addressed on Capitol Hill.

We also know that as the COVID-19 pandemic took hold in early 2020, nearly 3 1/2 years ago, the number of people who opted to retire earlier than the historical trend would have predicted, jumped significantly, as you can see in our next chart.

As you can see, over the last three years, an additional 2.4 million people retired above what would have been predicted by historical age trends and the timing of claiming Social Security benefits. This also means that those people are not paying FICA tax into the system while they are drawing benefits out of Social Security.    

This also explains in part that despite the economy slowing, and the Fed rapidly increasing interest rates to bring down inflation, the unemployment rate remains surprisingly low. With this many people no longer in the workforce, employers are struggling to fill open positions.

And every Saturday we work in the yard
Pick up the dog doo
Hope that it's hard (woof woof)

Take out the garbage and clean out the garage
My friend's got a Chrysler
I've got a Dodge
We're just ordinary average guys
Ordinary average guys

It seems that getting older and retiring earlier have become both ordinary and average in the US. Much like Joe Walsh and his friends described in the song lyrics above, many people have decided that working longer to create more income and wealth was not worth the effort. 

However, this will have implications and consequences for our nation’s employers, and for the future of our entitlement programs. We wanted you to understand the demographic and workforce trends that could potentially impact you, our trusted friends, and clients. We felt this was an important story to share as we continue “Moving Life Forward”.

© 2023 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.