There's A Storm A Comin'

Jul. 27, 2017 9:05 AM ET72 Comments
Roger Nusbaum profile picture
Roger Nusbaum


  • Bloomberg interviewed Alicia Munnell about "failing" Social Security.
  • Intended replacement rates are nonsense Social Security Admin wants.
  • People want to know what their benefit will be.

By Roger Nusbaum, AdvisorShares ETF Strategist

Bloomberg interviewed Alicia Munnell from the Boston College Center for Retirement Research. She of course has come to be a thought leader for what ails the Social Security system. Shockingly, it boils down to three things: cutting benefits, raising the cap one way or another or some combo of both. I’ve framed it numerous times by saying that something will have to give.

Included in there is what I will bluntly call nonsense about replacement rates as in how much of someone’s income Social Security is intended to replace. There was talk in the interview about replacement rate dropping from 36% to 27% over some long period of time.

It’s nonsense for a long list of reasons including people making well above the cap won’t get anywhere near that sort of replacement rate, replacing X% of your income focuses on the wrong thing, income versus spending. Many people plan to have their mortgage paid off by the time they retire; someone who is retired is less likely to save for retirement. Another point missed by replacement rates is people who live below their means.

Social Security wants people to know how much their benefit will be; they send it to us every year. What’s your benefit (and what’s your partner’s benefit if applicable)? I’ve disclosed before that my FRA is $2800 (today’s dollars) starting in 2033 (I would note I hope to still be working past that age but it might be difficult to attract clients when I am 80). If my wife takes her spousal benefit at 65 in 2037 she would get $1200. That adds up to more than our fixed monthly expenses including the mortgage on a house we moved into in 2012 that we’ve been paying extra on and should be paid off in four years.

This article was written by

Roger Nusbaum profile picture
Roger Nusbaum is the ETF Strategist for AdvisorShares. This Arizona-based professional has over 25 years of industry experience. He is also a well-known financial commentator covering ETFs, retirement planning and portfolio management for and at We think Roger is particularly insightful on exchange-traded funds, risk management and investing in international markets. Visit Roger's work at TheMaven ( and AlphaBaskets (

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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AdvisorShares is an SEC registered RIA, which advises to actively managed exchange traded funds (Active ETFs). The article has been written by Roger Nusbaum, AdvisorShares ETF Strategist. We are not receiving compensation for this article, and have no business relationship with any companwhose stock is mentioned in this article.

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