I used to think that Social Security was a pie in the sky dream. How can we possibly expect current workers to fund the retirements of the baby boom generation? It simply isn’t possible.

Right now, of course, funds are still pouring into the Social Security Administration. Put another way, more more is being deposited into Social Security than is being taken out. Of course, this isn’t a surprise. As I outline in The Coming Crash: How a House of Cards Will Fall as We Pull Out the Foundation, the first baby boomers will retire beginning in the 2008-2011 timeframe, with the tidal wave crashing a little later. Until the retirements hit, more people will be depositing then cashing out.

I’ve since come to think that the problem is even worse. You see, Social Security checks average $1184 per month. That is about $14,000 per year. That is simply not enough money for people to meaningfully live on.

“So what?” you ask? Well, aside from the fact that it would be nice if our fathers and mothers could actually live in something other than a cardboard box, and aside from the fact that it would be nice if they could eat something other than dog food, it means that these people will need to cash in on their retirements to supplement their Social Security incomes.

In some sense, this is not a surprise: people have been saving in mutual funds, IRAs, stocks, etc., so that they can enjoy retirement.

Of course, this is a known problem. Chuck Hagel (D: NE) suggested raising the retirement / Social Security benefits age. In the UK, they raised the age from 55 to 75 in one fell swoop. Why? The longer we can wait for people to take their money, the fewer are around to take their money out.

The downside is what will happen when they pull their money out. It will be like a leak in a Dutch dike.

There won’t be little boy to plug it with his finger. But will you have a rowboat so that you can float?

[ This blog has been an outgrowth of work I’ve done as a computational modeler, applying my expertise to answer the question of what the boomers will do to the stock market, as well as discussions based on current-day events. For more information, visit http://www.thecomingcrashonline.com, or read the book “The Coming Crash: How a House of Cards Will Fall as We Pull Out the Foundation.” ]