Episodes

Episode 155: The Social Security Sky Isn’t Falling with Kerry Pechter

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In 2034 or 2035, the Social Security trust fund will be depleted. Much has been written about the significance of the event. Kerry Pechter, Editor of the Retirement Income Journal joins us again on the show to discuss why this fear is overblown.
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Episode Transcript

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[kerry_h_pechter]: i’m accustomed to

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[ramsey_d_smith]: yeh yeah

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[kerry_h_pechter]: that

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[ramsey_d_smith]: yeah

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[paul_tyler]: all right high this is paul tyler

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[ramsey_d_smith]: yeah

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[paul_tyler]: and welcome to

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[ramsey_d_smith]: yeah

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[paul_tyler]: another episode of that annuity show

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[ramsey_d_smith]: a

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[paul_tyler]: ramsey good to see you

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[ramsey_d_smith]: a pleasure

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[paul_tyler]: and we’ve got another returning guest today
do you want to do the intro

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[ramsey_d_smith]: absolutely we’re delighted to have cary petto
rejoin us carry for those of you don’t

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[ramsey_d_smith]: know and i imagine like anybody was
on this call is probably either at least

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[ramsey_d_smith]: heard of carry or s publication the
retirement income journal a very important voice in

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[ramsey_d_smith]: the space a thoughtful and a critical
voice in in the life insurance space and

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[ramsey_d_smith]: we’re really lucky to have him here
a m there are lots of there are

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[ramsey_d_smith]: lots of topics in the retirement space
that that that cary can speak to and

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[ramsey_d_smith]: today we’re going to focus on social
security which is um i think we can

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[ramsey_d_smith]: never talk too much about it and
care brings a very unique and passionate perspective

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[ramsey_d_smith]: to it so with that cary tell
us

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[kerry_h_pechter]: oh

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[ramsey_d_smith]: tell us a little bit about the
retirement income journal its objectives your mission and

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[ramsey_d_smith]: then after that we can really start
hitting on what you think needs to change

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[ramsey_d_smith]: with respect to the discussion on social
security oh

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[kerry_h_pechter]: sure sure yeah i’m founder editor and
publisher

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: of the retirement income journal it was
created in two thousand nine right in at

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[kerry_h_pechter]: the beginning of the recovery from the

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: financial crisis

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: when the financial crisis bottomed and

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: i set out to cover everything

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: involved with retirement income and that would
be everything from personal retirement income planning to

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[ramsey_d_smith]: ye

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[kerry_h_pechter]: all the products involved in that the
annuity products as well as

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[ramsey_d_smith]: ah

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[kerry_h_pechter]: bond ladders and and deferred annuities and
uh

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: and also not so much to find
benefit plans but the four o one case

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[kerry_h_pechter]: space the social security space the and
then

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[ramsey_d_smith]: ah

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[kerry_h_pechter]: comparative systems around the world to our
retirement system for the sake of comparison so

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[kerry_h_pechter]: i’ve sort of brought

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[ramsey_d_smith]: no

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[kerry_h_pechter]: in whatever seem to be interesting

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: at the time and that

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: i

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: hoped people would give a wider perspective
because i thought that that the

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: people should people are buried pretty much
in their silos their sort of their gopher

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[kerry_h_pechter]: holes and and the best best thing
i could do to

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: to help them would be to give
them a kind of cross

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: silos look

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[paul_tyler]: all right

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[ramsey_d_smith]: well

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[kerry_h_pechter]: ah

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[paul_tyler]: i will

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[ramsey_d_smith]: that’s fantastic go ahead go ahead paul

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[paul_tyler]: no i’ll just roll a ball right
down the center

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[ramsey_d_smith]: m

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[paul_tyler]: lane here challenge the

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[ramsey_d_smith]: oh

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[paul_tyler]: question challenge the answer so

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: yeah

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[paul_tyler]: you know look i’ve got

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[ramsey_d_smith]: yeah

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[paul_tyler]: i’m not that far away from return
but it’s still got away as carry i

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[paul_tyler]: don’t

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: yeah

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[paul_tyler]: think social security is going to be

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[ramsey_d_smith]: oh

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[paul_tyler]: there that safety net that

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[ramsey_d_smith]: oh

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[paul_tyler]: insurance program started

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[ramsey_d_smith]: oh

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[paul_tyler]: by the government it’s going broke

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[ramsey_d_smith]: m

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[paul_tyler]: what what

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[kerry_h_pechter]: m

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[paul_tyler]: help

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[ramsey_d_smith]: oh

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[paul_tyler]: how should i really be thinking about
this how should be framing

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[ramsey_d_smith]: yeah

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[paul_tyler]: this question what’s the real

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[ramsey_d_smith]: ah

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[paul_tyler]: what’s real what’s not

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[kerry_h_pechter]: well we have to understand that that
social security is important to everyone because you

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[kerry_h_pechter]: have to remember that even people who
whose main interest is in investing in the

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[kerry_h_pechter]: risky markets that that social

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: security acts as kind of a ballast
in their

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: retirement income so that if sort

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: of you’re professional getting you know somewhere
or a couple getting somewhere between forty and

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: eighty thousand dollars a year social

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: security minus taxes and meta care

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[ramsey_d_smith]: yes

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[kerry_h_pechter]: that you know that’s giving you that’s
opening up a big

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[ramsey_d_smith]: he

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[kerry_h_pechter]: space for you to

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: invest that much more money in equities
and not have to worry so you have

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[kerry_h_pechter]: to think of it in the context
of the entire uh uh everybody needs to

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[kerry_h_pechter]: think about

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: social security it’s not as though the
wealthy can can say

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: i mean perhaps the very

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: very wealthy can say but

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: even

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: the affluent need to think about how
it works as a element in their portfolio

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[kerry_h_pechter]: so that’s that’s the way

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[paul_tyler]: yeah

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[kerry_h_pechter]: of establishing a larger audience for this
but but as far as the i wrote

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[kerry_h_pechter]: i’m called

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[paul_tyler]: oh

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[kerry_h_pechter]: social securities problems are more political than
financial

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: and i’m going to explain

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: basically why that’s true and also why

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: the financial the financing problems that have
are are easily are not as scary as

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[kerry_h_pechter]: they’ve been made out to be the
first thing i have t do is to

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[kerry_h_pechter]: acknowledge the economist

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[ramsey_d_smith]: m

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[kerry_h_pechter]: jeff brown at the university of illinois

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: for for help all of us in
the annuity industry see that the product and

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[kerry_h_pechter]: annuity and social security is an annuity
that the that the

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: product is insurance

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: it’s not an investment and so that
and i say

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[ramsey_d_smith]: yah

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[kerry_h_pechter]: that so when people say to

155
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[ramsey_d_smith]: ah

156
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[kerry_h_pechter]: me you know i can invest my
own money better than the ah government can

157
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[kerry_h_pechter]: or an advisor tells me that they’ve
done the math and they’ve shown that anybody

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[kerry_h_pechter]: who’s making more than eighty thousand dollars

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[paul_tyler]: ah

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[kerry_h_pechter]: a year can do better

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[ramsey_d_smith]: m

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[kerry_h_pechter]: with the investments

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: than they can over their lifetime with

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[ramsey_d_smith]: m

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[kerry_h_pechter]: social security i say well and in
you know in recalling jeff brown observation that

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[kerry_h_pechter]: it’s not an investment it’s insurance that
social

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: security is yes you can

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: invest your own money better than

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: social security can the government

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[ramsey_d_smith]: m

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[kerry_h_pechter]: can but you can’t insure yourself against
the things that social security for insurance you

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[kerry_h_pechter]: need large numbers

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[ramsey_d_smith]: m

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[kerry_h_pechter]: and insurance s based on the law
of large numbers the risks and the costs

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[kerry_h_pechter]: are

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: spread out over not we three

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[ramsey_d_smith]: a

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[kerry_h_pechter]: hundred you

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[ramsey_d_smith]: fish

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[kerry_h_pechter]: know two hundred million workers but also
the

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[ramsey_d_smith]: ye

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[kerry_h_pechter]: you know the long term

188
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[ramsey_d_smith]: yes

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[kerry_h_pechter]: infinite lifetime of the united

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: states more or less and so you
have an insure

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: you’re

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: having insurance product and this insurance product
not only

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[ramsey_d_smith]: yeah much

197
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[kerry_h_pechter]: provides you with a return

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[paul_tyler]: yeah

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[kerry_h_pechter]: in fact return

200
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[ramsey_d_smith]: thank you

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[kerry_h_pechter]: is the wrong way to think about
what

202
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[ramsey_d_smith]: i

203
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[kerry_h_pechter]: you get from self security because you’re
not they get an income you get you

204
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[kerry_h_pechter]: get insurance from longevity risk the risk
of outliving your income you get insurance from

205
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[kerry_h_pechter]: market risk the risk of retiring in
it down turn

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: also called sequence risk

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[ramsey_d_smith]: oh

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[kerry_h_pechter]: the you’re protected from inflation risk

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[ramsey_d_smith]: yeah

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[kerry_h_pechter]: and

212
00:06:49,116 –> 00:06:49,361
[ramsey_d_smith]: oh

213
00:06:50,617 –> 00:06:57,528
[kerry_h_pechter]: and a couple of other risks and
so to not under to think of social

214
00:06:57,588 –> 00:07:02,536
[kerry_h_pechter]: security in terms of average internal rate
of return is ex there the same

215
00:07:02,736 –> 00:07:02,977
[ramsey_d_smith]: yes

216
00:07:02,897 –> 00:07:06,243
[kerry_h_pechter]: making the same mistake is when people
look at an income annuity

217
00:07:05,976 –> 00:07:07,086
[ramsey_d_smith]: yeah

218
00:07:06,443 –> 00:07:07,044
[kerry_h_pechter]: and try to

219
00:07:06,969 –> 00:07:06,990
[paul_tyler]: m

220
00:07:07,665 –> 00:07:08,226
[kerry_h_pechter]: compare

221
00:07:07,716 –> 00:07:07,939
[ramsey_d_smith]: yeah

222
00:07:08,647 –> 00:07:09,228
[kerry_h_pechter]: the internal

223
00:07:09,186 –> 00:07:09,954
[ramsey_d_smith]: yeah

224
00:07:09,288 –> 00:07:11,471
[kerry_h_pechter]: rate of return on average of the
income

225
00:07:11,406 –> 00:07:11,867
[ramsey_d_smith]: oh

226
00:07:11,531 –> 00:07:17,722
[kerry_h_pechter]: annuity to an investment and to the
average long term return to the markets so

227
00:07:18,082 –> 00:07:26,236
[kerry_h_pechter]: so we’re mixing apples and origins and
somehow the narrative about social security has alling

228
00:07:26,296 –> 00:07:36,434
[kerry_h_pechter]: into the hands of the investment folks
which is not altogether surprising but but it’s

229
00:07:36,734 –> 00:07:36,874
[kerry_h_pechter]: it’s

230
00:07:36,996 –> 00:07:37,198
[ramsey_d_smith]: yeah

231
00:07:37,295 –> 00:07:38,878
[kerry_h_pechter]: so it’s been miss it’s mis

232
00:07:38,826 –> 00:07:39,106
[ramsey_d_smith]: oh

233
00:07:38,978 –> 00:07:42,063
[kerry_h_pechter]: characterized it’s the ugly duck in rather

234
00:07:42,366 –> 00:07:42,628
[ramsey_d_smith]: yeah

235
00:07:42,504 –> 00:07:43,345
[kerry_h_pechter]: its portrayed as the

236
00:07:43,506 –> 00:07:43,806
[ramsey_d_smith]: oh

237
00:07:43,706 –> 00:07:48,575
[kerry_h_pechter]: duckling rather than the swan that it
is now that’s i’ve said a lot there

238
00:07:48,755 –> 00:07:52,542
[kerry_h_pechter]: and maybe i can if you still
have some questions about it maybe i can

239
00:07:52,926 –> 00:07:53,646
[ramsey_d_smith]: yeah

240
00:07:53,003 –> 00:07:53,765
[kerry_h_pechter]: unpack it a little

241
00:07:54,705 –> 00:07:58,988
[ramsey_d_smith]: m no i think that’s very clear
and

242
00:07:59,118 –> 00:07:59,261
[kerry_h_pechter]: yeah

243
00:07:59,268 –> 00:07:59,489
[ramsey_d_smith]: you know

244
00:07:59,910 –> 00:08:00,178
[paul_tyler]: oh

245
00:07:59,910 –> 00:08:06,581
[ramsey_d_smith]: i will say personally i agree with
everything you said about the the value proposition

246
00:08:06,921 –> 00:08:09,465
[ramsey_d_smith]: of social security v c v just
about any oth

247
00:08:10,311 –> 00:08:10,394
[kerry_h_pechter]: ah

248
00:08:10,327 –> 00:08:14,013
[ramsey_d_smith]: uh potential source for all the various
reasons that you mentioned now um

249
00:08:14,526 –> 00:08:15,126
[kerry_h_pechter]: oh

250
00:08:15,215 –> 00:08:18,300
[ramsey_d_smith]: one of the one of the the
elements of the

251
00:08:18,369 –> 00:08:18,390
[paul_tyler]: m

252
00:08:18,380 –> 00:08:22,748
[ramsey_d_smith]: current dialogue in the market about social
security as well yeah fine even if i

253
00:08:22,808 –> 00:08:23,570
[ramsey_d_smith]: agree it’s great

254
00:08:25,086 –> 00:08:25,327
[kerry_h_pechter]: yeah

255
00:08:26,716 –> 00:08:33,086
[ramsey_d_smith]: the average consumer is hearing frequently that
that it’s not going to be around i

256
00:08:33,186 –> 00:08:37,213
[ramsey_d_smith]: spoke to i spoke to somebody ho
was doing some work around my house recently

257
00:08:37,313 –> 00:08:38,175
[ramsey_d_smith]: and who mentioned

258
00:08:38,211 –> 00:08:38,374
[paul_tyler]: yeah

259
00:08:38,235 –> 00:08:41,059
[ramsey_d_smith]: that you know that she had just
started taking social security she was sixty two

260
00:08:41,100 –> 00:08:44,966
[ramsey_d_smith]: years old and i said well why
did you do that i mean borrowing a

261
00:08:45,006 –> 00:08:49,013
[ramsey_d_smith]: health reason i said you should do
everything you can she was still employed in

262
00:08:49,073 –> 00:08:51,998
[ramsey_d_smith]: some way you should do everything you
can do hanging on to your seventy and

263
00:08:52,058 –> 00:08:56,407
[ramsey_d_smith]: one of the first things she said
she was concerned about it not being around

264
00:08:56,487 –> 00:09:02,764
[ramsey_d_smith]: for her and she’s only she’s already
sixty two m so how do you think

265
00:09:02,804 –> 00:09:08,175
[ramsey_d_smith]: that perception was created and you know
what do you think we can do to

266
00:09:08,496 –> 00:09:14,263
[ramsey_d_smith]: to alleviate that perception to the people
actually use this this amazing benefit

267
00:09:14,010 –> 00:09:14,252
[paul_tyler]: yeah

268
00:09:14,404 –> 00:09:15,588
[ramsey_d_smith]: more optimately

269
00:09:17,326 –> 00:09:20,472
[kerry_h_pechter]: well it’s interesting that you know people
believe what they hear over

270
00:09:20,436 –> 00:09:20,718
[ramsey_d_smith]: oh

271
00:09:21,153 –> 00:09:24,139
[kerry_h_pechter]: the back fence more readily than they
believe say

272
00:09:24,051 –> 00:09:24,191
[ramsey_d_smith]: yeah

273
00:09:24,599 –> 00:09:27,365
[kerry_h_pechter]: steve goss the chief actuary of social
security

274
00:09:28,446 –> 00:09:28,707
[ramsey_d_smith]: oh

275
00:09:28,726 –> 00:09:32,472
[kerry_h_pechter]: who who’s not as far as i
know shouldn’t speak for him but from the

276
00:09:32,533 –> 00:09:33,574
[kerry_h_pechter]: time that i’ve talked to him

277
00:09:33,746 –> 00:09:33,988
[ramsey_d_smith]: yeah

278
00:09:34,436 –> 00:09:36,018
[kerry_h_pechter]: he’s not particularly concerned

279
00:09:35,616 –> 00:09:35,897
[ramsey_d_smith]: yeah

280
00:09:35,880 –> 00:09:36,484
[paul_tyler]: oh

281
00:09:36,539 –> 00:09:38,122
[kerry_h_pechter]: about so security but her

282
00:09:38,215 –> 00:09:38,457
[paul_tyler]: yes

283
00:09:38,543 –> 00:09:45,634
[kerry_h_pechter]: her she’s where her fear comes from
of course is the ms characterization

284
00:09:45,096 –> 00:09:45,498
[ramsey_d_smith]: oh

285
00:09:45,694 –> 00:09:49,441
[kerry_h_pechter]: is that she’s read but the mis
characterizations are rooted in this

286
00:09:49,296 –> 00:09:49,660
[ramsey_d_smith]: oh

287
00:09:49,601 –> 00:09:54,433
[kerry_h_pechter]: idea that the social security system is
going to he broke in twenty thirty four

288
00:09:55,416 –> 00:09:55,577
[kerry_h_pechter]: and

289
00:09:56,316 –> 00:09:56,537
[ramsey_d_smith]: yeah

290
00:09:56,982 –> 00:09:59,626
[kerry_h_pechter]: that’s ah complete

291
00:09:59,295 –> 00:10:00,576
[ramsey_d_smith]: yeah yeah

292
00:09:59,666 –> 00:10:00,668
[kerry_h_pechter]: mischaracterization

293
00:10:00,666 –> 00:10:00,686
[ramsey_d_smith]: m

294
00:10:00,870 –> 00:10:02,010
[paul_tyler]: yeah

295
00:10:01,369 –> 00:10:07,099
[kerry_h_pechter]: the let’s say that you were buying
a health insurance and the demographics of your

296
00:10:07,239 –> 00:10:15,633
[kerry_h_pechter]: pool changed and the uh insurance company
was no longer to maintain the same level

297
00:10:15,974 –> 00:10:17,877
[kerry_h_pechter]: of protections

298
00:10:17,376 –> 00:10:17,798
[ramsey_d_smith]: oh

299
00:10:18,358 –> 00:10:19,059
[kerry_h_pechter]: unless you went to

300
00:10:19,116 –> 00:10:19,377
[ramsey_d_smith]: yeah

301
00:10:19,139 –> 00:10:20,982
[kerry_h_pechter]: a cheaper unless same expense

302
00:10:20,646 –> 00:10:20,950
[ramsey_d_smith]: oh

303
00:10:21,122 –> 00:10:22,504
[kerry_h_pechter]: and level so you would have

304
00:10:22,446 –> 00:10:22,747
[ramsey_d_smith]: yeah

305
00:10:22,525 –> 00:10:24,267
[kerry_h_pechter]: to either pay higher premium to get

306
00:10:24,180 –> 00:10:24,382
[paul_tyler]: oh

307
00:10:24,648 –> 00:10:27,613
[kerry_h_pechter]: the coverage that you’re getting now or
you would have to

308
00:10:27,765 –> 00:10:27,786
[ramsey_d_smith]: m

309
00:10:28,755 –> 00:10:29,596
[kerry_h_pechter]: take lower benefits

310
00:10:29,256 –> 00:10:29,600
[ramsey_d_smith]: my

311
00:10:30,240 –> 00:10:31,350
[paul_tyler]: yeah

312
00:10:30,398 –> 00:10:33,944
[kerry_h_pechter]: and and the i guess implied there
would be that

313
00:10:33,756 –> 00:10:35,076
[ramsey_d_smith]: yeah

314
00:10:34,304 –> 00:10:38,638
[kerry_h_pechter]: well if the insurance and he does
not either raise you know if you

315
00:10:38,796 –> 00:10:39,606
[ramsey_d_smith]: yeah

316
00:10:39,199 –> 00:10:40,621
[kerry_h_pechter]: do not choose either higher

317
00:10:40,416 –> 00:10:41,256
[ramsey_d_smith]: yeah

318
00:10:40,962 –> 00:10:42,544
[kerry_h_pechter]: premiums or lower benefits

319
00:10:42,186 –> 00:10:42,386
[ramsey_d_smith]: yeah

320
00:10:43,186 –> 00:10:47,673
[kerry_h_pechter]: the insurance company will in effect go
out of business if that’s its only business

321
00:10:47,796 –> 00:10:48,062
[ramsey_d_smith]: yeah

322
00:10:48,414 –> 00:10:52,020
[kerry_h_pechter]: and so so but of course nobody
ever thinks

323
00:10:51,966 –> 00:10:52,288
[ramsey_d_smith]: yeah

324
00:10:52,381 –> 00:10:56,408
[kerry_h_pechter]: when they get a rate increase from
their insurance company or even from their electrical

325
00:10:56,488 –> 00:10:57,469
[kerry_h_pechter]: company they

326
00:10:57,360 –> 00:10:57,601
[paul_tyler]: yeah

327
00:10:57,549 –> 00:11:01,476
[kerry_h_pechter]: may not like it but it does
not mean that the insurance come he is

328
00:11:01,556 –> 00:11:02,558
[kerry_h_pechter]: going to go broke

329
00:11:02,826 –> 00:11:03,007
[ramsey_d_smith]: yeah

330
00:11:03,018 –> 00:11:08,497
[kerry_h_pechter]: in the insurentin the united states of
america is the biggest safest richest

331
00:11:09,126 –> 00:11:10,446
[ramsey_d_smith]: yeah

332
00:11:09,178 –> 00:11:12,884
[kerry_h_pechter]: most stable insurance company that has ever
existed in the

333
00:11:12,936 –> 00:11:13,836
[ramsey_d_smith]: oh

334
00:11:12,944 –> 00:11:18,794
[kerry_h_pechter]: history of the world and so to
say that social security is going to go

335
00:11:18,974 –> 00:11:19,896
[kerry_h_pechter]: broke is like saying

336
00:11:20,265 –> 00:11:20,286
[ramsey_d_smith]: m

337
00:11:20,517 –> 00:11:24,383
[kerry_h_pechter]: that the united states is going to
go broke and and unless you want to

338
00:11:24,423 –> 00:11:27,428
[kerry_h_pechter]: break in here i’ll i’ll go on
with with

339
00:11:27,876 –> 00:11:28,081
[ramsey_d_smith]: yeah

340
00:11:28,410 –> 00:11:31,034
[kerry_h_pechter]: i don’t want to go too much
into the history of social security and the

341
00:11:31,074 –> 00:11:34,358
[kerry_h_pechter]: political reasons why it was set up
the

342
00:11:34,275 –> 00:11:34,296
[ramsey_d_smith]: m

343
00:11:34,418 –> 00:11:36,940
[kerry_h_pechter]: way it was in order to look
something

344
00:11:36,606 –> 00:11:36,992
[ramsey_d_smith]: oh

345
00:11:37,081 –> 00:11:41,285
[kerry_h_pechter]: like a defined benefit pension and the
defined benefit pension can

346
00:11:41,046 –> 00:11:41,247
[ramsey_d_smith]: yeah

347
00:11:42,266 –> 00:11:42,346
[kerry_h_pechter]: you

348
00:11:42,276 –> 00:11:43,305
[ramsey_d_smith]: yeah

349
00:11:42,406 –> 00:11:46,330
[kerry_h_pechter]: know can default on its full

350
00:11:46,335 –> 00:11:46,356
[ramsey_d_smith]: m

351
00:11:46,410 –> 00:11:50,634
[kerry_h_pechter]: benefits but the social security system is
not and there is not

352
00:11:50,676 –> 00:11:50,976
[ramsey_d_smith]: oh

353
00:11:50,834 –> 00:11:51,515
[kerry_h_pechter]: going to be

354
00:11:51,999 –> 00:11:52,179
[ramsey_d_smith]: yeah

355
00:11:52,616 –> 00:11:56,186
[kerry_h_pechter]: a crisis unless you call the like
there’s goin to be no more of a

356
00:11:56,246 –> 00:11:57,891
[kerry_h_pechter]: crisis with so security

357
00:11:58,200 –> 00:11:58,444
[paul_tyler]: oh

358
00:11:58,553 –> 00:12:01,779
[kerry_h_pechter]: in in twenty thirty four then there
was going to be

359
00:12:01,746 –> 00:12:02,826
[ramsey_d_smith]: yeah

360
00:12:02,140 –> 00:12:02,961
[kerry_h_pechter]: a default

361
00:12:02,886 –> 00:12:03,048
[ramsey_d_smith]: oh

362
00:12:03,161 –> 00:12:05,565
[kerry_h_pechter]: of the united states debt in two
thousand eleven

363
00:12:05,877 –> 00:12:06,039
[ramsey_d_smith]: yeah

364
00:12:06,287 –> 00:12:07,308
[kerry_h_pechter]: when we had the

365
00:12:07,383 –> 00:12:07,545
[ramsey_d_smith]: yeah

366
00:12:07,469 –> 00:12:08,230
[kerry_h_pechter]: quote you know

367
00:12:08,346 –> 00:12:08,527
[ramsey_d_smith]: that’s

368
00:12:09,572 –> 00:12:10,654
[kerry_h_pechter]: temper tantrum over the

369
00:12:10,806 –> 00:12:11,066
[ramsey_d_smith]: oh

370
00:12:11,155 –> 00:12:13,479
[kerry_h_pechter]: debt the debt limit yet

371
00:12:13,355 –> 00:12:13,927
[ramsey_d_smith]: yeah oh

372
00:12:13,599 –> 00:12:14,781
[kerry_h_pechter]: we as we have debt limits

373
00:12:14,640 –> 00:12:15,360
[paul_tyler]: yeah

374
00:12:14,841 –> 00:12:21,332
[kerry_h_pechter]: they come and go and so securities
debt limit so to speak will come and

375
00:12:21,392 –> 00:12:28,023
[kerry_h_pechter]: go and but we don’t even we
won’t even necessarily notice it unless people make

376
00:12:28,063 –> 00:12:32,170
[kerry_h_pechter]: a big deal out of it because
social security is already coming

377
00:12:31,866 –> 00:12:32,329
[ramsey_d_smith]: oh

378
00:12:32,370 –> 00:12:35,295
[kerry_h_pechter]: out of part of socialsecurity benefits are
already

379
00:12:35,130 –> 00:12:35,212
[ramsey_d_smith]: ah

380
00:12:35,475 –> 00:12:35,796
[kerry_h_pechter]: kind ing

381
00:12:35,766 –> 00:12:36,027
[ramsey_d_smith]: oh

382
00:12:36,057 –> 00:12:39,179
[kerry_h_pechter]: out of the general fund of the
united states

383
00:12:39,496 –> 00:12:39,777
[ramsey_d_smith]: right so

384
00:12:39,802 –> 00:12:40,224
[kerry_h_pechter]: neiborhood

385
00:12:39,817 –> 00:12:39,957
[ramsey_d_smith]: let’s

386
00:12:39,960 –> 00:12:40,162
[paul_tyler]: yeah

387
00:12:40,117 –> 00:12:41,379
[ramsey_d_smith]: let’s let’s

388
00:12:41,538 –> 00:12:41,658
[kerry_h_pechter]: so

389
00:12:41,619 –> 00:12:41,780
[ramsey_d_smith]: let’s

390
00:12:42,200 –> 00:12:42,361
[kerry_h_pechter]: there

391
00:12:42,321 –> 00:12:42,421
[ramsey_d_smith]: can

392
00:12:42,421 –> 00:12:42,562
[kerry_h_pechter]: was

393
00:12:42,461 –> 00:12:42,841
[ramsey_d_smith]: we break it

394
00:12:42,863 –> 00:12:42,963
[kerry_h_pechter]: no

395
00:12:42,881 –> 00:12:43,442
[ramsey_d_smith]: down a little bit

396
00:12:44,308 –> 00:12:46,096
[kerry_h_pechter]: okay well let’s we need to break
that down

397
00:12:46,026 –> 00:12:46,366
[ramsey_d_smith]: yeah

398
00:12:46,216 –> 00:12:47,803
[kerry_h_pechter]: go ahead and maybe you can me

399
00:12:47,909 –> 00:12:51,535
[ramsey_d_smith]: i want to yeah so let’s because
there’s there’s a lot

400
00:12:51,450 –> 00:12:52,830
[paul_tyler]: yeah

401
00:12:51,615 –> 00:12:54,019
[ramsey_d_smith]: of here’s a lot of important elements
to what you’re

402
00:12:53,940 –> 00:12:53,960
[paul_tyler]: m

403
00:12:54,059 –> 00:12:58,486
[ramsey_d_smith]: saying so let’s first start with this
notion of the of the twenty thirty four

404
00:12:58,526 –> 00:13:03,575
[ramsey_d_smith]: dat moves around at twenty four five
every i don’t know periodically it gets updated

405
00:13:04,657 –> 00:13:07,642
[ramsey_d_smith]: but one is just to be clear
on what happens on that date it’s not

406
00:13:07,702 –> 00:13:12,009
[ramsey_d_smith]: that it’s not that social security does
not enough in flows to pay the outflows

407
00:13:12,670 –> 00:13:16,917
[ramsey_d_smith]: it just to pay any outflows is
just that the inflows

408
00:13:16,560 –> 00:13:16,781
[paul_tyler]: oh

409
00:13:16,957 –> 00:13:20,102
[ramsey_d_smith]: will only equal only equal eighty percent
of the outflows

410
00:13:20,100 –> 00:13:20,120
[paul_tyler]: m

411
00:13:20,162 –> 00:13:20,904
[ramsey_d_smith]: and the trust fund

412
00:13:21,356 –> 00:13:21,538
[kerry_h_pechter]: right

413
00:13:21,605 –> 00:13:23,933
[ramsey_d_smith]: the trust won’t be able to make
up the difference is that correct

414
00:13:24,849 –> 00:13:26,117
[kerry_h_pechter]: uh yes i think we’re

415
00:13:26,202 –> 00:13:26,262
[ramsey_d_smith]: is

416
00:13:26,278 –> 00:13:26,660
[kerry_h_pechter]: already

417
00:13:26,343 –> 00:13:26,384
[ramsey_d_smith]: it

418
00:13:27,926 –> 00:13:28,447
[kerry_h_pechter]: out of the

419
00:13:28,509 –> 00:13:28,530
[paul_tyler]: m

420
00:13:28,527 –> 00:13:33,095
[kerry_h_pechter]: interest on the trust fund or the
trust fund is already so

421
00:13:33,156 –> 00:13:33,378
[ramsey_d_smith]: yeah

422
00:13:33,175 –> 00:13:35,259
[kerry_h_pechter]: what is happening now is that the
general

423
00:13:35,014 –> 00:13:35,196
[ramsey_d_smith]: yeah

424
00:13:35,379 –> 00:13:35,680
[kerry_h_pechter]: fund

425
00:13:35,556 –> 00:13:35,817
[ramsey_d_smith]: oh

426
00:13:36,141 –> 00:13:38,325
[kerry_h_pechter]: is redeeming trust fund assets

427
00:13:38,976 –> 00:13:40,056
[ramsey_d_smith]: yeah

428
00:13:39,436 –> 00:13:41,119
[kerry_h_pechter]: in other words the government

429
00:13:41,137 –> 00:13:41,318
[ramsey_d_smith]: right

430
00:13:41,399 –> 00:13:44,244
[kerry_h_pechter]: is paying to redeem those it’s giving

431
00:13:44,079 –> 00:13:44,181
[ramsey_d_smith]: ah

432
00:13:44,344 –> 00:13:45,686
[kerry_h_pechter]: social security money from

433
00:13:45,756 –> 00:13:46,686
[ramsey_d_smith]: oh

434
00:13:45,767 –> 00:13:53,240
[kerry_h_pechter]: the general fund technically to redeem social
securities trust fund but it doesn’t really matter

435
00:13:53,280 –> 00:13:57,347
[kerry_h_pechter]: whether it’s redeeming the trust fund or
not the important thing is to know is

436
00:13:57,447 –> 00:14:03,000
[kerry_h_pechter]: that the money started coming out of
the common of the general fund of the

437
00:14:03,020 –> 00:14:09,277
[kerry_h_pechter]: united states and no one noticed it
it was a purely

438
00:14:09,413 –> 00:14:09,514
[paul_tyler]: ah

439
00:14:09,898 –> 00:14:10,499
[kerry_h_pechter]: technical

440
00:14:10,236 –> 00:14:10,539
[ramsey_d_smith]: oh

441
00:14:10,760 –> 00:14:16,550
[kerry_h_pechter]: event there was no crisis and this
is going to go on until twenty thirty

442
00:14:16,650 –> 00:14:19,314
[kerry_h_pechter]: four whereas in twenty thirty four there
will be a

443
00:14:19,485 –> 00:14:19,506
[ramsey_d_smith]: m

444
00:14:19,494 –> 00:14:20,476
[kerry_h_pechter]: technical limit

445
00:14:20,616 –> 00:14:20,897
[ramsey_d_smith]: oh

446
00:14:20,957 –> 00:14:22,139
[kerry_h_pechter]: to the amount of money

447
00:14:22,326 –> 00:14:22,668
[ramsey_d_smith]: oh

448
00:14:22,680 –> 00:14:24,543
[kerry_h_pechter]: that the general fund can continue

449
00:14:24,585 –> 00:14:24,606
[ramsey_d_smith]: m

450
00:14:24,623 –> 00:14:27,327
[kerry_h_pechter]: to supply to social security because

451
00:14:27,156 –> 00:14:27,176
[ramsey_d_smith]: m

452
00:14:27,648 –> 00:14:28,810
[kerry_h_pechter]: of a technical

453
00:14:28,536 –> 00:14:28,840
[ramsey_d_smith]: oh

454
00:14:29,431 –> 00:14:35,661
[kerry_h_pechter]: law there is nothing in the world
to stop the united states general fund from

455
00:14:35,762 –> 00:14:38,847
[kerry_h_pechter]: continuing to make up the short fall
in the social

456
00:14:38,850 –> 00:14:39,840
[paul_tyler]: oh

457
00:14:38,907 –> 00:14:39,788
[kerry_h_pechter]: security as

458
00:14:39,816 –> 00:14:40,596
[ramsey_d_smith]: oh

459
00:14:39,888 –> 00:14:43,675
[kerry_h_pechter]: they are doing now and there is
no reason for and

460
00:14:43,626 –> 00:14:43,889
[ramsey_d_smith]: oh

461
00:14:43,755 –> 00:14:44,476
[kerry_h_pechter]: to have this

462
00:14:44,406 –> 00:14:44,647
[ramsey_d_smith]: yah

463
00:14:44,977 –> 00:14:47,440
[kerry_h_pechter]: i’m going to get really excited to
hear and i don’t know if that’s a

464
00:14:47,480 –> 00:14:48,182
[kerry_h_pechter]: good thing or not

465
00:14:48,523 –> 00:14:48,543
[ramsey_d_smith]: h

466
00:14:48,822 –> 00:14:50,044
[kerry_h_pechter]: but there is

467
00:14:50,216 –> 00:14:51,018
[ramsey_d_smith]: before you do though

468
00:14:51,156 –> 00:14:53,286
[kerry_h_pechter]: yeah

469
00:14:51,218 –> 00:14:55,205
[ramsey_d_smith]: before you before you do i just

470
00:14:55,167 –> 00:14:55,309
[kerry_h_pechter]: yeah

471
00:14:55,225 –> 00:14:58,290
[ramsey_d_smith]: want to be i just want to
be clear on something because right just

472
00:14:58,566 –> 00:14:59,376
[kerry_h_pechter]: yeah

473
00:14:58,931 –> 00:15:03,561
[ramsey_d_smith]: so there there’s the general fund which
pays which pays the money that ends up

474
00:15:03,621 –> 00:15:04,784
[ramsey_d_smith]: in people’s mail box right

475
00:15:05,406 –> 00:15:05,646
[kerry_h_pechter]: there’s

476
00:15:05,606 –> 00:15:05,747
[ramsey_d_smith]: and

477
00:15:05,827 –> 00:15:06,147
[kerry_h_pechter]: general

478
00:15:06,048 –> 00:15:06,228
[ramsey_d_smith]: eighty

479
00:15:06,207 –> 00:15:06,468
[kerry_h_pechter]: fund

480
00:15:06,288 –> 00:15:06,730
[ramsey_d_smith]: percent of

481
00:15:07,189 –> 00:15:07,950
[kerry_h_pechter]: redeems

482
00:15:07,311 –> 00:15:07,773
[ramsey_d_smith]: i’m going to just

483
00:15:08,311 –> 00:15:13,980
[kerry_h_pechter]: redeems the trust fund assets and then
the social security takes the money

484
00:15:14,136 –> 00:15:16,086
[ramsey_d_smith]: yeah

485
00:15:14,521 –> 00:15:19,792
[kerry_h_pechter]: it gets from the redemption of the
trust fund ass and puts it into people’s

486
00:15:19,852 –> 00:15:21,964
[kerry_h_pechter]: mail boxes virtually

487
00:15:22,207 –> 00:15:28,037
[ramsey_d_smith]: agreed so when when the trust but
assets good to zero right on or around

488
00:15:28,117 –> 00:15:33,586
[ramsey_d_smith]: twenty thirty four then that twenty percent
if that’s the short whatever the show fall

489
00:15:33,686 –> 00:15:33,807
[ramsey_d_smith]: is

490
00:15:33,690 –> 00:15:33,931
[paul_tyler]: yeah

491
00:15:34,187 –> 00:15:35,249
[ramsey_d_smith]: it has to come from

492
00:15:35,319 –> 00:15:35,460
[paul_tyler]: yeah

493
00:15:35,329 –> 00:15:38,254
[ramsey_d_smith]: somewhere it can no longer come from
the trust fund so

494
00:15:38,199 –> 00:15:38,220
[paul_tyler]: m

495
00:15:38,334 –> 00:15:42,521
[ramsey_d_smith]: then some action will have to be
taken and we may agree that it’s likely

496
00:15:42,581 –> 00:15:47,250
[ramsey_d_smith]: that some political action will be taken
but some politica action somebody will have to

497
00:15:47,290 –> 00:15:50,658
[ramsey_d_smith]: do something somebody in the united states
government whether it’s the president our congress or

498
00:15:50,718 –> 00:15:55,908
[ramsey_d_smith]: somebody is gonna have to take some
action to source that money to make up

499
00:15:56,008 –> 00:15:57,790
[ramsey_d_smith]: that short fall that’s now being covered

500
00:15:57,720 –> 00:15:57,740
[paul_tyler]: m

501
00:15:57,810 –> 00:15:58,531
[ramsey_d_smith]: by the trust fund

502
00:15:58,847 –> 00:15:58,969
[kerry_h_pechter]: yea

503
00:15:59,172 –> 00:16:02,035
[ramsey_d_smith]: so how do we think about the
risk around that

504
00:16:03,316 –> 00:16:03,516
[kerry_h_pechter]: well

505
00:16:03,496 –> 00:16:03,958
[ramsey_d_smith]: potential

506
00:16:03,716 –> 00:16:03,917
[kerry_h_pechter]: well

507
00:16:04,199 –> 00:16:05,827
[ramsey_d_smith]: action or inaction in twenty thirty

508
00:16:05,720 –> 00:16:05,880
[kerry_h_pechter]: as i

509
00:16:05,867 –> 00:16:05,987
[ramsey_d_smith]: four

510
00:16:05,980 –> 00:16:10,327
[kerry_h_pechter]: said at the beginning we’re talking about
a political risk in the same sense that

511
00:16:10,407 –> 00:16:11,609
[kerry_h_pechter]: the debt sealing

512
00:16:11,347 –> 00:16:11,508
[ramsey_d_smith]: yeah

513
00:16:12,170 –> 00:16:17,066
[kerry_h_pechter]: involved a political risk it did not
solve it did not involved

514
00:16:16,866 –> 00:16:17,131
[ramsey_d_smith]: oh

515
00:16:17,147 –> 00:16:18,429
[kerry_h_pechter]: the inability

516
00:16:17,826 –> 00:16:18,086
[ramsey_d_smith]: oh

517
00:16:18,930 –> 00:16:20,793
[kerry_h_pechter]: of the united states to make good

518
00:16:21,197 –> 00:16:21,217
[ramsey_d_smith]: h

519
00:16:21,474 –> 00:16:23,878
[kerry_h_pechter]: on it on its promises

520
00:16:23,505 –> 00:16:24,377
[ramsey_d_smith]: h yah

521
00:16:24,339 –> 00:16:25,821
[kerry_h_pechter]: so money

522
00:16:25,889 –> 00:16:26,556
[ramsey_d_smith]: hm

523
00:16:25,901 –> 00:16:27,203
[kerry_h_pechter]: is coming out of the general fund

524
00:16:27,096 –> 00:16:27,439
[ramsey_d_smith]: oh

525
00:16:27,324 –> 00:16:29,728
[kerry_h_pechter]: now we will

526
00:16:29,736 –> 00:16:30,696
[ramsey_d_smith]: yeah

527
00:16:29,788 –> 00:16:31,170
[kerry_h_pechter]: reach a just like

528
00:16:31,200 –> 00:16:31,403
[paul_tyler]: oh

529
00:16:31,210 –> 00:16:31,511
[kerry_h_pechter]: the debt

530
00:16:31,515 –> 00:16:31,536
[ramsey_d_smith]: m

531
00:16:31,571 –> 00:16:32,252
[kerry_h_pechter]: limit we will

532
00:16:32,277 –> 00:16:32,400
[paul_tyler]: yeah

533
00:16:32,312 –> 00:16:33,093
[kerry_h_pechter]: reach a legal

534
00:16:33,162 –> 00:16:33,304
[ramsey_d_smith]: yes

535
00:16:33,173 –> 00:16:36,178
[kerry_h_pechter]: limit that the that more money

536
00:16:36,066 –> 00:16:36,247
[ramsey_d_smith]: yeah

537
00:16:36,319 –> 00:16:39,544
[kerry_h_pechter]: is now coming out of the general
fund than was intended

538
00:16:39,246 –> 00:16:39,547
[ramsey_d_smith]: oh

539
00:16:39,684 –> 00:16:41,487
[kerry_h_pechter]: by the original securities laws

540
00:16:41,395 –> 00:16:41,436
[ramsey_d_smith]: ah

541
00:16:41,948 –> 00:16:45,414
[kerry_h_pechter]: and then as i you know showed
in the analogy to the insurance

542
00:16:45,278 –> 00:16:45,380
[ramsey_d_smith]: ah

543
00:16:45,474 –> 00:16:47,958
[kerry_h_pechter]: company we can either raise premiums

544
00:16:47,676 –> 00:16:48,456
[ramsey_d_smith]: yeah

545
00:16:48,480 –> 00:16:48,500
[paul_tyler]: m

546
00:16:48,696 –> 00:16:49,686
[ramsey_d_smith]: yeah

547
00:16:48,779 –> 00:16:50,242
[kerry_h_pechter]: or we can cut benefits

548
00:16:50,526 –> 00:16:51,546
[ramsey_d_smith]: yeah

549
00:16:50,863 –> 00:16:51,704
[kerry_h_pechter]: and that will

550
00:16:51,666 –> 00:16:52,806
[ramsey_d_smith]: yeah

551
00:16:51,764 –> 00:16:54,708
[kerry_h_pechter]: be a pill litically incredibly ownerous

552
00:16:54,606 –> 00:16:55,596
[ramsey_d_smith]: yeah

553
00:16:54,848 –> 00:16:57,570
[kerry_h_pechter]: process because it’s going to you know

554
00:16:57,636 –> 00:16:57,860
[ramsey_d_smith]: oh

555
00:16:57,750 –> 00:17:02,435
[kerry_h_pechter]: change you know what’s mine and what’s
yours but but i want to establish

556
00:17:02,352 –> 00:17:03,640
[ramsey_d_smith]: hm ah

557
00:17:04,216 –> 00:17:07,401
[kerry_h_pechter]: and this goes back to what i
said before about the different risks that social

558
00:17:07,461 –> 00:17:08,683
[kerry_h_pechter]: security i

559
00:17:08,685 –> 00:17:08,706
[ramsey_d_smith]: m

560
00:17:08,743 –> 00:17:09,524
[kerry_h_pechter]: want to establish

561
00:17:09,189 –> 00:17:09,373
[ramsey_d_smith]: yeah

562
00:17:09,885 –> 00:17:12,830
[kerry_h_pechter]: that even if you’re paying more in

563
00:17:12,786 –> 00:17:13,066
[ramsey_d_smith]: oh

564
00:17:13,030 –> 00:17:17,197
[kerry_h_pechter]: premiums which is what we call the
pay roll tack is what the payroll tax

565
00:17:17,286 –> 00:17:17,946
[ramsey_d_smith]: oh

566
00:17:17,310 –> 00:17:17,553
[paul_tyler]: yeah

567
00:17:17,357 –> 00:17:18,580
[kerry_h_pechter]: is the more

568
00:17:18,906 –> 00:17:19,186
[ramsey_d_smith]: oh

569
00:17:19,802 –> 00:17:22,045
[kerry_h_pechter]: what you even if your premiums go

570
00:17:22,176 –> 00:17:22,845
[ramsey_d_smith]: yeah

571
00:17:22,326 –> 00:17:23,788
[kerry_h_pechter]: up and even if your benefits

572
00:17:23,556 –> 00:17:23,844
[ramsey_d_smith]: oh

573
00:17:23,888 –> 00:17:26,152
[kerry_h_pechter]: go down a little whichever way it
goes

574
00:17:25,956 –> 00:17:26,177
[ramsey_d_smith]: yeah

575
00:17:26,252 –> 00:17:30,097
[kerry_h_pechter]: for you that if it is still

576
00:17:29,663 –> 00:17:30,906
[ramsey_d_smith]: a my

577
00:17:30,658 –> 00:17:32,799
[kerry_h_pechter]: going to be worth it and it’s
going to be

578
00:17:32,916 –> 00:17:33,161
[ramsey_d_smith]: oh

579
00:17:32,920 –> 00:17:34,481
[kerry_h_pechter]: worth it measurably

580
00:17:34,446 –> 00:17:34,729
[ramsey_d_smith]: yeah

581
00:17:34,821 –> 00:17:36,843
[kerry_h_pechter]: in terms of what it would cost
you

582
00:17:37,086 –> 00:17:37,106
[ramsey_d_smith]: m

583
00:17:37,463 –> 00:17:40,376
[kerry_h_pechter]: to go into the private market or

584
00:17:40,356 –> 00:17:41,316
[ramsey_d_smith]: yeah

585
00:17:40,597 –> 00:17:43,141
[kerry_h_pechter]: into the investment market to either save
enough

586
00:17:43,056 –> 00:17:43,317
[ramsey_d_smith]: oh

587
00:17:43,481 –> 00:17:45,705
[kerry_h_pechter]: to insure yourself against those same risks

588
00:17:45,576 –> 00:17:45,596
[ramsey_d_smith]: m

589
00:17:46,246 –> 00:17:47,588
[kerry_h_pechter]: or to buy insurance

590
00:17:47,505 –> 00:17:47,526
[ramsey_d_smith]: m

591
00:17:47,648 –> 00:17:50,573
[kerry_h_pechter]: against those same risks from an insurance
company

592
00:17:50,466 –> 00:17:51,186
[ramsey_d_smith]: yeah

593
00:17:51,334 –> 00:17:54,240
[kerry_h_pechter]: no matter what the premiums go up

594
00:17:54,186 –> 00:17:54,655
[ramsey_d_smith]: oh

595
00:17:54,260 –> 00:17:56,265
[kerry_h_pechter]: we’re talking about a twenty percent gap
no matter

596
00:17:56,166 –> 00:17:56,448
[ramsey_d_smith]: oh

597
00:17:56,345 –> 00:18:01,806
[kerry_h_pechter]: what the premiums go up to or
how much the benefits go down that if

598
00:18:01,906 –> 00:18:03,288
[kerry_h_pechter]: it is still going

599
00:18:03,239 –> 00:18:05,316
[ramsey_d_smith]: ah

600
00:18:03,369 –> 00:18:06,334
[kerry_h_pechter]: to be an incredible value and

601
00:18:06,276 –> 00:18:06,537
[ramsey_d_smith]: yeah

602
00:18:06,834 –> 00:18:08,117
[kerry_h_pechter]: i’m it’s unfortunate

603
00:18:07,681 –> 00:18:07,821
[ramsey_d_smith]: yeah

604
00:18:08,157 –> 00:18:13,085
[kerry_h_pechter]: to me that it seems unfortunate to
me that even the pro social security crowd

605
00:18:13,726 –> 00:18:14,007
[kerry_h_pechter]: or say

606
00:18:14,526 –> 00:18:14,908
[ramsey_d_smith]: oh

607
00:18:14,770 –> 00:18:17,581
[kerry_h_pechter]: the bi partisan policy center that

608
00:18:18,546 –> 00:18:18,772
[ramsey_d_smith]: yeah

609
00:18:19,346 –> 00:18:19,486
[kerry_h_pechter]: that

610
00:18:19,509 –> 00:18:19,530
[paul_tyler]: m

611
00:18:19,846 –> 00:18:20,568
[kerry_h_pechter]: weighs in on this

612
00:18:20,556 –> 00:18:20,801
[ramsey_d_smith]: yes

613
00:18:20,728 –> 00:18:24,855
[kerry_h_pechter]: a lot of times with a lot
of credibility they have all adopted

614
00:18:24,546 –> 00:18:25,536
[ramsey_d_smith]: oh

615
00:18:25,556 –> 00:18:25,656
[kerry_h_pechter]: the

616
00:18:25,686 –> 00:18:26,052
[ramsey_d_smith]: oh

617
00:18:25,756 –> 00:18:27,519
[kerry_h_pechter]: investment view of social

618
00:18:27,516 –> 00:18:27,717
[ramsey_d_smith]: oh

619
00:18:27,539 –> 00:18:31,686
[kerry_h_pechter]: security and saying well it’s not that
much more expensive or

620
00:18:31,776 –> 00:18:33,844
[ramsey_d_smith]: oh

621
00:18:32,207 –> 00:18:37,194
[kerry_h_pechter]: maybe we should invest some of that
money in stocks and they are abandoning

622
00:18:36,936 –> 00:18:37,137
[ramsey_d_smith]: oh

623
00:18:38,646 –> 00:18:41,491
[kerry_h_pechter]: the real the true story

624
00:18:41,745 –> 00:18:41,766
[ramsey_d_smith]: m

625
00:18:41,751 –> 00:18:41,791
[kerry_h_pechter]: of

626
00:18:41,766 –> 00:18:42,636
[ramsey_d_smith]: yeah

627
00:18:42,072 –> 00:18:47,561
[kerry_h_pechter]: the true justification for sociacurity it’s insurance
it’s called social

628
00:18:47,756 –> 00:18:47,857
[ramsey_d_smith]: ah

629
00:18:47,841 –> 00:18:49,224
[kerry_h_pechter]: insurance for

630
00:18:49,084 –> 00:18:49,145
[ramsey_d_smith]: ye

631
00:18:49,384 –> 00:18:56,716
[kerry_h_pechter]: a reason it’s not an investment there
is no fund that’s generating returns an insurance

632
00:18:56,756 –> 00:19:02,085
[kerry_h_pechter]: company doesn’t give you back the money
that you put in it gives you a

633
00:19:02,205 –> 00:19:02,346
[kerry_h_pechter]: cur

634
00:19:02,286 –> 00:19:02,567
[ramsey_d_smith]: oh

635
00:19:02,446 –> 00:19:10,369
[kerry_h_pechter]: and it pays a claim if you
experience an insurable event insurance is not an

636
00:19:10,469 –> 00:19:17,801
[kerry_h_pechter]: investment it’s an offloading of risk and
that offloading of risk is extremely valuable and

637
00:19:18,162 –> 00:19:19,203
[kerry_h_pechter]: in in our investment

638
00:19:19,058 –> 00:19:19,219
[ramsey_d_smith]: is he

639
00:19:19,283 –> 00:19:19,684
[kerry_h_pechter]: world

640
00:19:19,299 –> 00:19:20,102
[ramsey_d_smith]: freezing up for you too

641
00:19:20,245 –> 00:19:25,474
[kerry_h_pechter]: which all attuned to you know because
of our involvement in for one k we

642
00:19:25,574 –> 00:19:26,716
[kerry_h_pechter]: have lost sight of

643
00:19:26,625 –> 00:19:26,646
[ramsey_d_smith]: m

644
00:19:27,397 –> 00:19:28,118
[kerry_h_pechter]: what the value

645
00:19:27,846 –> 00:19:27,966
[ramsey_d_smith]: ah

646
00:19:28,198 –> 00:19:32,465
[kerry_h_pechter]: of insurance is it’s easy to lose
sight of because it’s a call

647
00:19:32,314 –> 00:19:32,475
[ramsey_d_smith]: yes

648
00:19:33,006 –> 00:19:33,106
[kerry_h_pechter]: but

649
00:19:33,146 –> 00:19:33,327
[ramsey_d_smith]: yeah

650
00:19:33,147 –> 00:19:37,774
[kerry_h_pechter]: it’s very easy to lose sight of
the value of the coverage and yet

651
00:19:37,806 –> 00:19:38,067
[ramsey_d_smith]: yeah

652
00:19:37,814 –> 00:19:39,577
[kerry_h_pechter]: we all know what the value of
the coverage is

653
00:19:39,546 –> 00:19:40,536
[ramsey_d_smith]: yeah

654
00:19:39,637 –> 00:19:41,080
[kerry_h_pechter]: every time somebody rams

655
00:19:40,830 –> 00:19:41,092
[paul_tyler]: yeah

656
00:19:41,140 –> 00:19:41,821
[kerry_h_pechter]: into our car

657
00:19:42,178 –> 00:19:42,362
[ramsey_d_smith]: sir

658
00:19:42,602 –> 00:19:44,505
[kerry_h_pechter]: and or burns our hat

659
00:19:44,583 –> 00:19:44,764
[paul_tyler]: yeah

660
00:19:44,647 –> 00:19:44,871
[kerry_h_pechter]: down

661
00:19:44,866 –> 00:19:50,495
[ramsey_d_smith]: all right yeah so we’re going to
agree with you because we were sort of

662
00:19:51,537 –> 00:19:52,038
[ramsey_d_smith]: were focusing

663
00:19:51,870 –> 00:19:52,113
[paul_tyler]: oh

664
00:19:52,058 –> 00:19:58,330
[ramsey_d_smith]: the insurance industry and the the value
one of

665
00:19:58,320 –> 00:19:59,160
[paul_tyler]: oh

666
00:19:58,370 –> 00:20:02,382
[ramsey_d_smith]: the challenges the value of insurance is
sometimes very hard for

667
00:20:02,520 –> 00:20:02,843
[paul_tyler]: oh

668
00:20:03,976 –> 00:20:06,780
[ramsey_d_smith]: people to appreciate or perceive or the
value

669
00:20:06,450 –> 00:20:06,690
[paul_tyler]: oh

670
00:20:06,861 –> 00:20:12,510
[ramsey_d_smith]: of it to them in the first
order and in the second order the real

671
00:20:12,650 –> 00:20:16,677
[ramsey_d_smith]: cost of providing them with that value
i think it’s hard for peopl two to

672
00:20:16,737 –> 00:20:18,560
[ramsey_d_smith]: appreciate and so one of the challenges

673
00:20:18,330 –> 00:20:18,453
[paul_tyler]: ye

674
00:20:19,381 –> 00:20:21,846
[ramsey_d_smith]: carry that i think that the government
will have

675
00:20:22,137 –> 00:20:22,319
[kerry_h_pechter]: yes

676
00:20:22,927 –> 00:20:26,914
[ramsey_d_smith]: is the same one that that we
often have in this industry which is that

677
00:20:27,916 –> 00:20:33,225
[ramsey_d_smith]: um hat in fact this is more
valuable than perhaps you know you not you

678
00:20:33,385 –> 00:20:39,395
[ramsey_d_smith]: but like the sort of the persona
of the consumer can can necessarily sort of

679
00:20:39,455 –> 00:20:45,149
[ramsey_d_smith]: quantify i appreciate and in fact in
a in a strange way you should want

680
00:20:45,269 –> 00:20:50,277
[ramsey_d_smith]: to you should want you should want
a you should want somebody to come to

681
00:20:50,317 –> 00:20:53,463
[ramsey_d_smith]: you and say you know it’s going
to cost you a bit more but it’s

682
00:20:53,523 –> 00:20:58,050
[ramsey_d_smith]: so valuable and i can help you
understand how valuable it is that that you

683
00:20:58,170 –> 00:21:02,257
[ramsey_d_smith]: want you want to be paying more
and you want everybody else in the society

684
00:21:02,297 –> 00:21:06,164
[ramsey_d_smith]: to pay more to maintain this very
sort of very valuable benefit but that is

685
00:21:06,284 –> 00:21:07,045
[ramsey_d_smith]: very hard to do

686
00:21:08,158 –> 00:21:08,339
[kerry_h_pechter]: well

687
00:21:08,236 –> 00:21:08,417
[ramsey_d_smith]: arry

688
00:21:08,560 –> 00:21:08,621
[kerry_h_pechter]: it

689
00:21:08,679 –> 00:21:08,799
[ramsey_d_smith]: it’s

690
00:21:08,721 –> 00:21:08,822
[kerry_h_pechter]: is

691
00:21:08,860 –> 00:21:09,021
[ramsey_d_smith]: very

692
00:21:08,940 –> 00:21:09,690
[paul_tyler]: oh

693
00:21:09,061 –> 00:21:11,616
[ramsey_d_smith]: hard and yeah

694
00:21:11,156 –> 00:21:12,879
[kerry_h_pechter]: it’s well it’s hard to do because

695
00:21:12,776 –> 00:21:12,997
[ramsey_d_smith]: go ahead

696
00:21:13,580 –> 00:21:15,503
[kerry_h_pechter]: for a simple reason social security

697
00:21:15,636 –> 00:21:15,919
[ramsey_d_smith]: oh

698
00:21:15,663 –> 00:21:20,792
[kerry_h_pechter]: you can’t look at social people people
want to look at it it’s very it’s

699
00:21:21,052 –> 00:21:21,793
[kerry_h_pechter]: almost impossible

700
00:21:21,576 –> 00:21:21,857
[ramsey_d_smith]: oh

701
00:21:21,853 –> 00:21:25,927
[kerry_h_pechter]: to look at insurance as an asset
it’s not priced

702
00:21:25,716 –> 00:21:25,958
[ramsey_d_smith]: oh

703
00:21:26,027 –> 00:21:27,389
[kerry_h_pechter]: as an asset it’s not

704
00:21:27,456 –> 00:21:27,738
[ramsey_d_smith]: oh

705
00:21:27,510 –> 00:21:30,715
[kerry_h_pechter]: traded as an asset it’s not inherited
as an asset

706
00:21:30,876 –> 00:21:31,956
[ramsey_d_smith]: oh

707
00:21:31,376 –> 00:21:36,444
[kerry_h_pechter]: it’s it’s and it only pays out
if an insurable event occurs which means you

708
00:21:36,505 –> 00:21:39,880
[kerry_h_pechter]: may never get your money but that
doesn’t

709
00:21:39,666 –> 00:21:39,946
[ramsey_d_smith]: oh

710
00:21:40,021 –> 00:21:43,819
[kerry_h_pechter]: make it less valuable while you have
it

711
00:21:44,106 –> 00:21:44,308
[ramsey_d_smith]: oh

712
00:21:44,160 –> 00:21:48,868
[kerry_h_pechter]: because it by taking certain kinds of
risk off your plate it allows you to

713
00:21:48,948 –> 00:21:52,374
[kerry_h_pechter]: take other risks like invest in

714
00:21:52,807 –> 00:21:53,009
[ramsey_d_smith]: sure

715
00:21:52,834 –> 00:21:57,803
[kerry_h_pechter]: if you you people don’t realize that
if social security went away they might have

716
00:21:57,863 –> 00:22:02,491
[kerry_h_pechter]: to in order to maintain their same
risk profile which everyone understands

717
00:22:02,106 –> 00:22:03,669
[ramsey_d_smith]: oh oh

718
00:22:03,432 –> 00:22:05,415
[kerry_h_pechter]: they would have to put more of
their money into bond

719
00:22:05,226 –> 00:22:06,036
[ramsey_d_smith]: yeah

720
00:22:05,616 –> 00:22:06,758
[kerry_h_pechter]: s because

721
00:22:06,546 –> 00:22:06,790
[ramsey_d_smith]: oh

722
00:22:06,838 –> 00:22:09,563
[kerry_h_pechter]: so security is a bond portfolio

723
00:22:09,456 –> 00:22:09,658
[ramsey_d_smith]: oh

724
00:22:10,365 –> 00:22:17,239
[kerry_h_pechter]: and and and i and i don’t
know why it’s it’s just very difficult to

725
00:22:17,299 –> 00:22:22,392
[kerry_h_pechter]: get this across and and i certainly
don’t want to be the only person saying

726
00:22:22,452 –> 00:22:23,154
[kerry_h_pechter]: this because

727
00:22:23,256 –> 00:22:23,536
[ramsey_d_smith]: oh

728
00:22:23,936 –> 00:22:27,644
[kerry_h_pechter]: i mean no one is going to
believe me alone even though i’m

729
00:22:28,545 –> 00:22:28,705
[ramsey_d_smith]: yeah

730
00:22:28,756 –> 00:22:30,225
[kerry_h_pechter]: right so

731
00:22:31,571 –> 00:22:32,232
[ramsey_d_smith]: and passionate

732
00:22:34,140 –> 00:22:34,830
[paul_tyler]: yeah

733
00:22:34,299 –> 00:22:34,940
[kerry_h_pechter]: and i can

734
00:22:34,986 –> 00:22:35,269
[ramsey_d_smith]: yeah

735
00:22:35,020 –> 00:22:36,763
[kerry_h_pechter]: marshal a lot of evidence for this

736
00:22:36,696 –> 00:22:37,596
[ramsey_d_smith]: oh

737
00:22:36,843 –> 00:22:37,925
[kerry_h_pechter]: and i can bring in people

738
00:22:37,706 –> 00:22:37,866
[ramsey_d_smith]: yeah

739
00:22:37,985 –> 00:22:38,866
[kerry_h_pechter]: who will who are

740
00:22:38,820 –> 00:22:39,046
[paul_tyler]: oh

741
00:22:38,946 –> 00:22:42,012
[kerry_h_pechter]: smarter than me and better qualified than
me to explain it in greater

742
00:22:41,817 –> 00:22:41,958
[ramsey_d_smith]: just

743
00:22:42,052 –> 00:22:47,020
[kerry_h_pechter]: detail but but i believe that the
problem is that social security and its defenders

744
00:22:47,100 –> 00:22:47,701
[kerry_h_pechter]: are playing

745
00:22:47,466 –> 00:22:47,667
[ramsey_d_smith]: oh

746
00:22:48,042 –> 00:22:51,107
[kerry_h_pechter]: the game they’re playing a running they’re
trying to play a running game done

747
00:22:51,006 –> 00:22:51,274
[ramsey_d_smith]: yeah

748
00:22:51,207 –> 00:22:55,194
[kerry_h_pechter]: game running gun game when their actual
game

749
00:22:55,116 –> 00:22:55,776
[ramsey_d_smith]: oh

750
00:22:55,374 –> 00:23:00,480
[kerry_h_pechter]: is a half court game and and
if they can’t if they have to play

751
00:23:00,980 –> 00:23:04,163
[kerry_h_pechter]: the running gun then they’re going to
lose that basketball game

752
00:23:04,746 –> 00:23:04,966
[ramsey_d_smith]: oh

753
00:23:05,264 –> 00:23:08,569
[kerry_h_pechter]: and and go celtic

754
00:23:08,526 –> 00:23:08,746
[ramsey_d_smith]: yeah

755
00:23:08,749 –> 00:23:11,697
[kerry_h_pechter]: because i’m from philadelphia and it might

756
00:23:11,559 –> 00:23:11,580
[paul_tyler]: m

757
00:23:11,737 –> 00:23:14,023
[kerry_h_pechter]: as well be the celtic rather than
the

758
00:23:13,956 –> 00:23:14,296
[ramsey_d_smith]: oh

759
00:23:15,056 –> 00:23:15,761
[kerry_h_pechter]: west coasters

760
00:23:16,552 –> 00:23:19,535
[paul_tyler]: well well you know argue

761
00:23:19,326 –> 00:23:19,587
[ramsey_d_smith]: oh

762
00:23:19,675 –> 00:23:22,117
[paul_tyler]: we’ve already seen those reductions you know
carry and

763
00:23:22,326 –> 00:23:23,406
[ramsey_d_smith]: yeah

764
00:23:22,598 –> 00:23:27,374
[paul_tyler]: tell me how if you think i’m
how you re frame or disagree with my

765
00:23:27,475 –> 00:23:32,523
[paul_tyler]: perspective on this you mentioned cut benefits
we know how popular that is okay

766
00:23:32,526 –> 00:23:32,546
[ramsey_d_smith]: m

767
00:23:32,583 –> 00:23:34,506
[paul_tyler]: we can raise premiums where

768
00:23:35,166 –> 00:23:35,607
[ramsey_d_smith]: oh

769
00:23:35,728 –> 00:23:40,937
[paul_tyler]: we’re kind of getting to and with
that today the third is need base testing

770
00:23:41,157 –> 00:23:41,418
[paul_tyler]: you know

771
00:23:42,216 –> 00:23:42,318
[ramsey_d_smith]: ye

772
00:23:42,660 –> 00:23:46,787
[paul_tyler]: now we saw that the full retirement
age start to creep out that that arguable

773
00:23:46,847 –> 00:23:50,535
[paul_tyler]: was a take away that was a
reduction social security benefits do you think we’ll

774
00:23:50,575 –> 00:23:50,695
[paul_tyler]: see

775
00:23:50,637 –> 00:23:50,801
[kerry_h_pechter]: right

776
00:23:50,776 –> 00:23:55,448
[paul_tyler]: need space is needs base testing an
effective way to make the numbers work better

777
00:23:55,360 –> 00:23:55,441
[ramsey_d_smith]: ah

778
00:23:57,157 –> 00:24:04,183
[kerry_h_pechter]: you have to remember needs base testing
uh would would go along with a complete

779
00:24:04,344 –> 00:24:08,833
[kerry_h_pechter]: overhaul now if you’re in a country
overseas that like

780
00:24:10,146 –> 00:24:10,450
[ramsey_d_smith]: oh

781
00:24:10,326 –> 00:24:12,108
[kerry_h_pechter]: i don’t know spain or

782
00:24:12,396 –> 00:24:12,577
[ramsey_d_smith]: oh

783
00:24:12,709 –> 00:24:13,591
[kerry_h_pechter]: other countries that have

784
00:24:13,716 –> 00:24:14,856
[ramsey_d_smith]: my

785
00:24:13,771 –> 00:24:18,339
[kerry_h_pechter]: gone from a pago system like we
have to a investment system once

786
00:24:18,306 –> 00:24:18,552
[ramsey_d_smith]: yes

787
00:24:18,419 –> 00:24:19,521
[kerry_h_pechter]: you if you have

788
00:24:19,416 –> 00:24:19,436
[ramsey_d_smith]: m

789
00:24:19,581 –> 00:24:23,868
[kerry_h_pechter]: an investment based system a workplace country
ibution system like our far one k

790
00:24:24,420 –> 00:24:25,470
[paul_tyler]: yeah

791
00:24:24,549 –> 00:24:29,397
[kerry_h_pechter]: then you have to think about having
a minimum benefit for people who don’t make

792
00:24:29,457 –> 00:24:32,703
[kerry_h_pechter]: enough money and pay enough in so
it’s it’s the

793
00:24:32,646 –> 00:24:33,169
[ramsey_d_smith]: oh

794
00:24:33,244 –> 00:24:34,105
[kerry_h_pechter]: the minimum

795
00:24:34,296 –> 00:24:35,076
[ramsey_d_smith]: oh

796
00:24:34,346 –> 00:24:34,806
[kerry_h_pechter]: benefit

797
00:24:35,076 –> 00:24:35,558
[ramsey_d_smith]: oh

798
00:24:35,608 –> 00:24:36,970
[kerry_h_pechter]: the means tested benefit

799
00:24:37,056 –> 00:24:39,323
[ramsey_d_smith]: yeah

800
00:24:37,771 –> 00:24:40,215
[kerry_h_pechter]: that is an artifact that is

801
00:24:40,356 –> 00:24:40,641
[ramsey_d_smith]: yeah

802
00:24:40,516 –> 00:24:41,638
[kerry_h_pechter]: a functionality

803
00:24:41,646 –> 00:24:42,014
[ramsey_d_smith]: oh

804
00:24:42,239 –> 00:24:44,963
[kerry_h_pechter]: of a different kind of retirement system

805
00:24:45,495 –> 00:24:45,516
[ramsey_d_smith]: m

806
00:24:45,785 –> 00:24:49,130
[kerry_h_pechter]: and so we i think it would
probably

807
00:24:49,065 –> 00:24:49,086
[ramsey_d_smith]: m

808
00:24:49,230 –> 00:24:50,352
[kerry_h_pechter]: be too expensive

809
00:24:50,256 –> 00:24:51,756
[ramsey_d_smith]: yeah

810
00:24:50,953 –> 00:24:56,723
[kerry_h_pechter]: to guarantee a certain level of you
know say twenty percent of retires who are

811
00:24:56,923 –> 00:25:01,871
[kerry_h_pechter]: may not even qualify right now for
so security benefit if we guaranteed them eight

812
00:25:01,911 –> 00:25:04,315
[kerry_h_pechter]: hundred dollars a month with no on
a means

813
00:25:04,116 –> 00:25:04,356
[ramsey_d_smith]: yeah

814
00:25:04,416 –> 00:25:11,168
[kerry_h_pechter]: tested basis anyway that would that in
itself would would require jumping off of the

815
00:25:11,228 –> 00:25:11,889
[kerry_h_pechter]: pago system

816
00:25:11,646 –> 00:25:11,931
[ramsey_d_smith]: oh

817
00:25:12,872 –> 00:25:13,814
[kerry_h_pechter]: is that is that clear

818
00:25:13,979 –> 00:25:14,222
[ramsey_d_smith]: yes

819
00:25:14,157 –> 00:25:14,670
[paul_tyler]: hm

820
00:25:15,356 –> 00:25:15,757
[kerry_h_pechter]: it’s really

821
00:25:15,740 –> 00:25:15,925
[paul_tyler]: yes

822
00:25:15,817 –> 00:25:16,999
[kerry_h_pechter]: a facet of a different

823
00:25:16,950 –> 00:25:17,092
[paul_tyler]: yeah

824
00:25:17,200 –> 00:25:23,932
[kerry_h_pechter]: kind of financing of retirement so and
then i think that and that brings around

825
00:25:24,073 –> 00:25:26,087
[kerry_h_pechter]: another subject which

826
00:25:26,616 –> 00:25:26,636
[ramsey_d_smith]: m

827
00:25:26,969 –> 00:25:30,179
[kerry_h_pechter]: which we have to consider is that
switching from a pago

828
00:25:30,156 –> 00:25:33,096
[ramsey_d_smith]: yah

829
00:25:30,320 –> 00:25:37,723
[kerry_h_pechter]: system to four or one i mean
a bigger four or one case system with

830
00:25:37,863 –> 00:25:39,806
[kerry_h_pechter]: less risk in it and

831
00:25:39,876 –> 00:25:40,776
[ramsey_d_smith]: yeah

832
00:25:40,307 –> 00:25:42,530
[kerry_h_pechter]: and then bringing in a minimum benefit

833
00:25:42,993 –> 00:25:43,174
[ramsey_d_smith]: yeah

834
00:25:43,010 –> 00:25:48,016
[kerry_h_pechter]: wow the negotiations and the design i

835
00:25:48,015 –> 00:25:48,036
[ramsey_d_smith]: m

836
00:25:48,056 –> 00:25:54,947
[kerry_h_pechter]: mean the amount of work politically and
economic and actuarial and investment and market and

837
00:25:55,545 –> 00:25:55,566
[ramsey_d_smith]: m

838
00:25:55,608 –> 00:25:57,491
[kerry_h_pechter]: i mean the amount of work that
would have to

839
00:25:57,465 –> 00:25:57,486
[ramsey_d_smith]: m

840
00:25:57,551 –> 00:26:06,716
[kerry_h_pechter]: go into that kind of transition utterly
utterly dwarfs the amount of effort it’s going

841
00:26:06,796 –> 00:26:11,504
[kerry_h_pechter]: to take for us to tweak social
security so that there’s a non event

842
00:26:11,886 –> 00:26:12,189
[ramsey_d_smith]: yeah

843
00:26:11,904 –> 00:26:13,832
[kerry_h_pechter]: and that people can stop worrying

844
00:26:13,626 –> 00:26:14,030
[ramsey_d_smith]: oh

845
00:26:13,913 –> 00:26:19,391
[kerry_h_pechter]: about it and and ironically you know
all these people these younger people who aren’t

846
00:26:19,411 –> 00:26:19,772
[kerry_h_pechter]: collecting

847
00:26:19,800 –> 00:26:20,022
[paul_tyler]: yeah

848
00:26:19,832 –> 00:26:22,997
[kerry_h_pechter]: social security they are paying fifteen per
cent into

849
00:26:22,830 –> 00:26:22,850
[paul_tyler]: m

850
00:26:23,057 –> 00:26:26,944
[kerry_h_pechter]: their out of their pay checks and
thinking that they’re not getting

851
00:26:26,686 –> 00:26:26,787
[ramsey_d_smith]: ah

852
00:26:27,084 –> 00:26:28,887
[kerry_h_pechter]: anything when they reach how

853
00:26:28,896 –> 00:26:29,324
[ramsey_d_smith]: ye

854
00:26:29,448 –> 00:26:30,249
[kerry_h_pechter]: insane

855
00:26:30,186 –> 00:26:30,206
[ramsey_d_smith]: m

856
00:26:31,091 –> 00:26:32,974
[kerry_h_pechter]: is that that they’re they’re

857
00:26:33,036 –> 00:26:33,056
[ramsey_d_smith]: m

858
00:26:33,054 –> 00:26:37,561
[kerry_h_pechter]: giving up a sixth of their pay
for something that they don’t believe i mean

859
00:26:37,742 –> 00:26:39,645
[kerry_h_pechter]: why are they not rioting

860
00:26:39,387 –> 00:26:39,467
[ramsey_d_smith]: ah

861
00:26:40,206 –> 00:26:43,998
[kerry_h_pechter]: in the streets instead of paying fifteen

862
00:26:43,659 –> 00:26:43,680
[paul_tyler]: m

863
00:26:43,665 –> 00:26:43,686
[ramsey_d_smith]: m

864
00:26:44,039 –> 00:26:47,952
[kerry_h_pechter]: per cent it makes no sense so
on some level

865
00:26:47,955 –> 00:26:47,976
[ramsey_d_smith]: m

866
00:26:48,000 –> 00:26:48,344
[paul_tyler]: oh

867
00:26:48,052 –> 00:26:50,137
[kerry_h_pechter]: they must believe they’re

868
00:26:50,085 –> 00:26:50,106
[ramsey_d_smith]: m

869
00:26:50,197 –> 00:26:56,908
[kerry_h_pechter]: going to get that benefit or else
i mean i would tell my kids now

870
00:26:57,875 –> 00:27:01,441
[kerry_h_pechter]: it’s time to go to the streets

871
00:27:04,506 –> 00:27:04,686
[ramsey_d_smith]: yeah

872
00:27:04,544 –> 00:27:04,925
[paul_tyler]: time to go

873
00:27:04,926 –> 00:27:05,230
[kerry_h_pechter]: oh

874
00:27:04,966 –> 00:27:06,129
[paul_tyler]: to the streets ramsey

875
00:27:06,526 –> 00:27:06,966
[kerry_h_pechter]: i mean we’re

876
00:27:06,911 –> 00:27:07,052
[paul_tyler]: we’re

877
00:27:07,026 –> 00:27:07,286
[kerry_h_pechter]: talking

878
00:27:07,112 –> 00:27:07,313
[paul_tyler]: at the

879
00:27:07,346 –> 00:27:07,927
[kerry_h_pechter]: about fifteen

880
00:27:07,834 –> 00:27:08,055
[paul_tyler]: near

881
00:27:08,007 –> 00:27:08,327
[kerry_h_pechter]: per cent

882
00:27:08,195 –> 00:27:08,336
[paul_tyler]: near

883
00:27:08,387 –> 00:27:08,727
[kerry_h_pechter]: of pay

884
00:27:08,650 –> 00:27:08,831
[ramsey_d_smith]: yeah

885
00:27:09,268 –> 00:27:11,490
[kerry_h_pechter]: i mean what is more what is
more gut level

886
00:27:11,550 –> 00:27:12,630
[paul_tyler]: yeah

887
00:27:11,570 –> 00:27:13,431
[kerry_h_pechter]: than that i mean don’t take that
money

888
00:27:13,266 –> 00:27:13,428
[ramsey_d_smith]: oh

889
00:27:13,348 –> 00:27:13,531
[paul_tyler]: yeah

890
00:27:13,492 –> 00:27:16,054
[kerry_h_pechter]: from me if you’re if you’re not
going to that’s fraud

891
00:27:15,726 –> 00:27:16,029
[ramsey_d_smith]: oh

892
00:27:16,734 –> 00:27:17,555
[kerry_h_pechter]: okay and

893
00:27:17,506 –> 00:27:17,586
[ramsey_d_smith]: so

894
00:27:17,652 –> 00:27:17,835
[paul_tyler]: right

895
00:27:17,827 –> 00:27:20,412
[ramsey_d_smith]: well how are you getting to the
fifteen per cent that’s the that’s the pica

896
00:27:20,493 –> 00:27:24,522
[ramsey_d_smith]: that somebody sees in their w to
plus the employer contribution together is that how

897
00:27:24,582 –> 00:27:25,524
[ramsey_d_smith]: you get the fifteen per cent

898
00:27:26,767 –> 00:27:28,871
[kerry_h_pechter]: oh yeah because everyone all economists

899
00:27:28,746 –> 00:27:30,015
[ramsey_d_smith]: yeah

900
00:27:28,971 –> 00:27:34,380
[kerry_h_pechter]: agree and and i’m speaking now for
all economists the agree

901
00:27:34,086 –> 00:27:34,287
[ramsey_d_smith]: yes

902
00:27:34,500 –> 00:27:36,323
[kerry_h_pechter]: that that you know whether

903
00:27:36,390 –> 00:27:36,617
[paul_tyler]: yeah

904
00:27:37,285 –> 00:27:42,162
[kerry_h_pechter]: the employ it takes its share of
the pay roll tax out of its compensation

905
00:27:41,588 –> 00:27:41,608
[ramsey_d_smith]: i

906
00:27:42,322 –> 00:27:44,561
[kerry_h_pechter]: budget and so that

907
00:27:44,428 –> 00:27:44,591
[ramsey_d_smith]: sure

908
00:27:44,963 –> 00:27:46,932
[kerry_h_pechter]: whether it whether it would give you
that

909
00:27:47,895 –> 00:27:47,916
[ramsey_d_smith]: m

910
00:27:47,936 –> 00:27:48,477
[kerry_h_pechter]: they it would give

911
00:27:48,486 –> 00:27:48,506
[ramsey_d_smith]: m

912
00:27:48,537 –> 00:27:49,378
[kerry_h_pechter]: you that income

913
00:27:49,596 –> 00:27:49,940
[ramsey_d_smith]: oh

914
00:27:49,618 –> 00:27:54,146
[kerry_h_pechter]: that’s an interesting thought experiment of whether
you would you know you’d get the extra

915
00:27:54,767 –> 00:27:55,989
[kerry_h_pechter]: six percent if the

916
00:27:56,280 –> 00:27:57,270
[paul_tyler]: oh

917
00:27:56,570 –> 00:28:01,518
[kerry_h_pechter]: employer didn’t have to pay any payroll
tax but i’ll tell you believe me when

918
00:28:02,420 –> 00:28:07,128
[kerry_h_pechter]: a country that goes to a defined
defined contribution

919
00:28:07,176 –> 00:28:07,498
[ramsey_d_smith]: oh

920
00:28:07,208 –> 00:28:11,795
[kerry_h_pechter]: plan with minimum benefits those they have
mandatory

921
00:28:10,995 –> 00:28:12,416
[ramsey_d_smith]: m yeah m

922
00:28:12,976 –> 00:28:14,118
[kerry_h_pechter]: employer contributions

923
00:28:14,346 –> 00:28:14,547
[ramsey_d_smith]: yeah

924
00:28:14,779 –> 00:28:16,502
[kerry_h_pechter]: so get real if we’re

925
00:28:16,444 –> 00:28:16,566
[ramsey_d_smith]: yeah

926
00:28:16,622 –> 00:28:18,205
[kerry_h_pechter]: going away to an investment based

927
00:28:18,036 –> 00:28:18,445
[ramsey_d_smith]: oh

928
00:28:18,265 –> 00:28:21,631
[kerry_h_pechter]: system from sociasecurity we’re going to a
new kind

929
00:28:21,465 –> 00:28:21,486
[ramsey_d_smith]: m

930
00:28:21,711 –> 00:28:22,532
[kerry_h_pechter]: of mandatory

931
00:28:22,337 –> 00:28:22,641
[ramsey_d_smith]: yes

932
00:28:22,672 –> 00:28:25,788
[kerry_h_pechter]: it’s not going to be optional under
those circumstances

933
00:28:25,211 –> 00:28:25,293
[ramsey_d_smith]: ah

934
00:28:25,908 –> 00:28:28,052
[kerry_h_pechter]: for employes to benefit and an employe

935
00:28:28,056 –> 00:28:28,318
[ramsey_d_smith]: my

936
00:28:28,092 –> 00:28:35,556
[kerry_h_pechter]: contribution is in australia or israel or
cost erica that’s going to be bigger what

937
00:28:35,676 –> 00:28:39,883
[kerry_h_pechter]: people have to pay now and people
have an option now to whether to contribute

938
00:28:39,923 –> 00:28:42,768
[kerry_h_pechter]: to their social security they’re not going
to it’s going to be more than six

939
00:28:42,868 –> 00:28:47,556
[kerry_h_pechter]: per cent so that’s what i’m saying
when it’s this is just not going to

940
00:28:47,596 –> 00:28:51,262
[kerry_h_pechter]: be like throwing a lever and half
of your social security budget goes into the

941
00:28:51,282 –> 00:28:53,746
[kerry_h_pechter]: stock market no that’s not what’s going
to happen

942
00:28:54,126 –> 00:28:54,146
[ramsey_d_smith]: m

943
00:28:54,167 –> 00:28:55,269
[kerry_h_pechter]: i mean if it does then

944
00:28:55,322 –> 00:28:55,506
[paul_tyler]: yeah

945
00:28:56,130 –> 00:29:00,800
[kerry_h_pechter]: it’s just it’s just making kicking a
problem on the road because then when

946
00:29:00,697 –> 00:29:00,717
[ramsey_d_smith]: m

947
00:29:00,840 –> 00:29:01,061
[kerry_h_pechter]: people

948
00:29:00,960 –> 00:29:01,830
[paul_tyler]: yeah

949
00:29:01,141 –> 00:29:02,023
[kerry_h_pechter]: realize how much risk

950
00:29:01,950 –> 00:29:02,274
[paul_tyler]: oh

951
00:29:02,083 –> 00:29:07,106
[kerry_h_pechter]: they’re carrying that they didn’t use to
carry that they’re going to start either they’re

952
00:29:07,186 –> 00:29:07,687
[kerry_h_pechter]: completely

953
00:29:07,680 –> 00:29:07,700
[paul_tyler]: m

954
00:29:07,827 –> 00:29:12,295
[kerry_h_pechter]: financially illiterate or they’re just going to
start i mean they may absorb it the

955
00:29:12,315 –> 00:29:16,061
[kerry_h_pechter]: way people are now absorbing a fifteen
percent tax without thinking that they’re going to

956
00:29:16,101 –> 00:29:17,984
[kerry_h_pechter]: get anything for it i mean get

957
00:29:17,956 –> 00:29:18,076
[ramsey_d_smith]: well

958
00:29:18,024 –> 00:29:18,145
[kerry_h_pechter]: your

959
00:29:18,096 –> 00:29:21,960
[ramsey_d_smith]: they’re only because hey’re only seeing seven
or eight percent of it right even i

960
00:29:22,040 –> 00:29:25,944
[ramsey_d_smith]: agree with you with the the from
an comes perspective but i think that most

961
00:29:26,044 –> 00:29:30,583
[ramsey_d_smith]: people only see the you know the
face that shows up on their pay check

962
00:29:30,623 –> 00:29:31,546
[ramsey_d_smith]: and that’s painful enough

963
00:29:31,510 –> 00:29:31,691
[paul_tyler]: yeah

964
00:29:32,007 –> 00:29:32,127
[ramsey_d_smith]: so

965
00:29:32,335 –> 00:29:32,516
[paul_tyler]: yeah

966
00:29:32,516 –> 00:29:33,657
[kerry_h_pechter]: i don’t know if they even i

967
00:29:33,642 –> 00:29:33,742
[paul_tyler]: all

968
00:29:33,738 –> 00:29:33,898
[kerry_h_pechter]: don’t

969
00:29:33,803 –> 00:29:33,944
[paul_tyler]: right

970
00:29:33,938 –> 00:29:34,038
[kerry_h_pechter]: know

971
00:29:33,964 –> 00:29:34,125
[paul_tyler]: well

972
00:29:34,098 –> 00:29:37,945
[kerry_h_pechter]: if they even they even think about
it if you’re making enough money so that

973
00:29:37,985 –> 00:29:38,906
[kerry_h_pechter]: you’ve reached your pier

974
00:29:38,736 –> 00:29:40,085
[ramsey_d_smith]: yeah

975
00:29:38,946 –> 00:29:41,791
[kerry_h_pechter]: limit by the middle of february then
you know

976
00:29:41,660 –> 00:29:41,801
[ramsey_d_smith]: yeah

977
00:29:41,911 –> 00:29:42,692
[kerry_h_pechter]: all about pica

978
00:29:42,726 –> 00:29:43,007
[ramsey_d_smith]: yeah

979
00:29:42,773 –> 00:29:45,037
[kerry_h_pechter]: limits but other people you

980
00:29:45,059 –> 00:29:45,199
[ramsey_d_smith]: yeah

981
00:29:45,097 –> 00:29:48,384
[kerry_h_pechter]: know have they don’t even know what
ficus stands for

982
00:29:50,649 –> 00:29:53,582
[ramsey_d_smith]: yeah

983
00:29:51,522 –> 00:29:55,852
[paul_tyler]: all right so hey listen we are
right at time ramsey

984
00:29:56,046 –> 00:29:58,470
[ramsey_d_smith]: yuh

985
00:29:56,132 –> 00:29:58,317
[paul_tyler]: final thoughts questions for carry

986
00:29:58,930 –> 00:30:03,237
[ramsey_d_smith]: carry great having you back on um
and i love to have you on again

987
00:30:04,179 –> 00:30:08,206
[ramsey_d_smith]: to talk about i can think of
three or four things i was reminded your

988
00:30:08,266 –> 00:30:08,987
[ramsey_d_smith]: trip to israel

989
00:30:08,806 –> 00:30:08,826
[paul_tyler]: i

990
00:30:09,227 –> 00:30:11,571
[ramsey_d_smith]: and how enlightening you know the writings

991
00:30:11,280 –> 00:30:12,120
[paul_tyler]: yeah

992
00:30:11,672 –> 00:30:16,039
[ramsey_d_smith]: that came out of that were and
how it was interesting perspective for comparison purposes

993
00:30:16,119 –> 00:30:16,219
[ramsey_d_smith]: so

994
00:30:16,686 –> 00:30:17,436
[kerry_h_pechter]: oh

995
00:30:16,800 –> 00:30:18,242
[ramsey_d_smith]: between between alternative

996
00:30:18,195 –> 00:30:18,216
[kerry_h_pechter]: m

997
00:30:18,303 –> 00:30:18,803
[ramsey_d_smith]: system so

998
00:30:19,266 –> 00:30:19,286
[kerry_h_pechter]: m

999
00:30:19,625 –> 00:30:23,211
[ramsey_d_smith]: thanks for come ing on and and
talking to us about social security and we

1000
00:30:23,271 –> 00:30:28,020
[ramsey_d_smith]: should we should line up you know
some other topics to to go over in

1001
00:30:28,080 –> 00:30:30,464
[ramsey_d_smith]: the end as the year progresses

1002
00:30:30,981 –> 00:30:31,142
[paul_tyler]: yeah

1003
00:30:31,106 –> 00:30:31,767
[kerry_h_pechter]: well i’m blowing to

1004
00:30:31,825 –> 00:30:32,348
[paul_tyler]: absolutely

1005
00:30:31,868 –> 00:30:32,749
[kerry_h_pechter]: iceland in august

1006
00:30:32,469 –> 00:30:32,931
[paul_tyler]: care we’ll put

1007
00:30:32,950 –> 00:30:33,030
[kerry_h_pechter]: and

1008
00:30:32,952 –> 00:30:33,253
[paul_tyler]: the links

1009
00:30:33,090 –> 00:30:33,371
[kerry_h_pechter]: i’ll be

1010
00:30:33,334 –> 00:30:33,434
[paul_tyler]: to

1011
00:30:33,531 –> 00:30:33,912
[kerry_h_pechter]: meeting with

1012
00:30:33,796 –> 00:30:33,876
[paul_tyler]: you

1013
00:30:33,952 –> 00:30:36,818
[kerry_h_pechter]: people there about their system they have
a a

1014
00:30:37,365 –> 00:30:37,976
[ramsey_d_smith]: m oh

1015
00:30:37,900 –> 00:30:42,480
[kerry_h_pechter]: a collective d c that’s it’s going
to be interesting

1016
00:30:43,725 –> 00:30:43,926
[ramsey_d_smith]: yeah

1017
00:30:44,300 –> 00:30:44,983
[paul_tyler]: interesting all right

1018
00:30:44,867 –> 00:30:44,967
[ramsey_d_smith]: i’m

1019
00:30:45,004 –> 00:30:45,144
[paul_tyler]: we’ll

1020
00:30:45,007 –> 00:30:45,147
[ramsey_d_smith]: going

1021
00:30:45,184 –> 00:30:45,406
[paul_tyler]: carry

1022
00:30:45,187 –> 00:30:45,448
[ramsey_d_smith]: to send

1023
00:30:45,486 –> 00:30:45,667
[paul_tyler]: wilt

1024
00:30:45,488 –> 00:30:49,258
[ramsey_d_smith]: you my my last my last and
most successful linked in post in six months

1025
00:30:49,298 –> 00:30:51,243
[ramsey_d_smith]: was about iceland so i’m going to
send it to you

1026
00:30:51,456 –> 00:30:51,977
[kerry_h_pechter]: oh great

1027
00:30:51,853 –> 00:30:52,015
[paul_tyler]: yeah

1028
00:30:52,559 –> 00:30:54,063
[kerry_h_pechter]: great okay it’s always

1029
00:30:53,916 –> 00:30:54,019
[ramsey_d_smith]: ye

1030
00:30:54,103 –> 00:30:54,364
[kerry_h_pechter]: good to

1031
00:30:54,360 –> 00:30:54,542
[paul_tyler]: oh

1032
00:30:54,424 –> 00:30:55,287
[kerry_h_pechter]: talk with you guys

1033
00:30:55,746 –> 00:30:55,766
[ramsey_d_smith]: m

1034
00:30:55,969 –> 00:30:57,272
[kerry_h_pechter]: you give me a lot of leash

1035
00:30:57,096 –> 00:30:57,816
[ramsey_d_smith]: yeah

1036
00:30:57,433 –> 00:30:57,573
[kerry_h_pechter]: so

1037
00:30:57,737 –> 00:30:58,021
[paul_tyler]: okay

1038
00:30:58,686 –> 00:30:59,489
[kerry_h_pechter]: always appreciate it

1039
00:31:00,096 –> 00:31:00,638
[ramsey_d_smith]: uh

1040
00:31:01,757 –> 00:31:01,778
[kerry_h_pechter]: i

1041
00:31:01,880 –> 00:31:02,101
[paul_tyler]: right

1042
00:31:02,085 –> 00:31:02,106
[ramsey_d_smith]: h

1043
00:31:02,261 –> 00:31:04,526
[paul_tyler]: excellent all right well thank you carry
thank you ramsey

1044
00:31:04,266 –> 00:31:04,507
[ramsey_d_smith]: oh

1045
00:31:04,826 –> 00:31:06,610
[paul_tyler]: and thanks to all our listeners join
us again

1046
00:31:06,516 –> 00:31:06,536
[ramsey_d_smith]: m

1047
00:31:06,650 –> 00:31:10,598
[paul_tyler]: next week for another episode of that
annuity show thanks

1048
00:31:11,556 –> 00:31:11,777
[kerry_h_pechter]: oh

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersEpisode 155: The Social Security Sky Isn’t Falling with Kerry Pechter

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