Ostrich effect is a cognitive bias and behavioral finance term describing the tendency to avoid uncomfortable, negative or risky information by ignoring it.
As every year when the new SS Trustees report comes out, we all eagerly look to see if there have been any changes . While discussing with a colleague the critical need for Social Security Reform, they had an interesting, if not concerning, response. Their thought was that since they were in college, many years ago, there has been constant doom and fear mongering about the upcoming failure of Social Security. They considered all of this talk scare tactics to get votes and keep senior citizens worried. I was really surprised to hear that someone that is within a couple of years of retiring, someone that would rely heavily on their social security payments to survive in retirement, was not taking any of this seriously. It had me go down a rabbit hole of research. Do many others think the same way?
In this compromise we have struck the best possible balance between the taxes we pay and the benefits paid back. President Ronald Reagan, signing H.R. 1900 into law on20 April 1983
It is true that as long as I remember, we were talking about the Social Security Trust Fund “running out of money”. Congress and the President created a bipartisan commission to make recommendations regarding the short-term financing crisis that was facing social security. The suggested reforms led to the Social Security Reform Act of 1983, which included raising the retirement age and taxing benefits. Even as he signed it into law, President Reagan declared this a compromise that was the “best possible balance” that still protected the elderly from benefit cuts.
By around 2010 the Trustees began projecting that the Social Security Trust Fund would become insolvent around 2037, but the real calls for urgent and specific action started in 2012. Is this the problem? That by looking ahead and being transparent about the challenges we have numbed out many adults to the upcoming dangers? Is it that this is so scary that we choose to ignore it? I am not sure why, but I know that its long past time to take this matter seriously.
It does seem that there are many that don’t really believe that anything will happen in year 2033. I have read numerous articles/blogs stating a belief that they will fix it like they always do. All of us that are relying on Social Security to be there for part or all of our retirement should be concerned. I agree that the date for insolvency has been talked about for decades and for a long time that date was far away and could have been considered conjecture 30 years ago. However, today that date is up to seven years away!
The time to ignore this issue or assume that someone else will fix it is gone. It’s time to get your head out of the sand. Time is up.
