Did the government make a Social Security goof?

Academics warn that agency officials are using outdated calculations and have severely overestimated the money available for retirees.

By Bruce Kennedy Jan 8, 2013 12:32PM

Image: Social Security Card (Comstock)The fiscal cliff has been averted for the moment, and Congress is continuing its latest game of financial chicken with a new target in sight: the upcoming debt ceiling. But two academics say all this political brawling is taking attention away from another crisis looming on the nation's horizon: Social Security.


Samir Soneji is a demographer and professor at the Dartmouth Institute for Health Policy and Clinical Practice, and Gary King is a professor of government at Harvard. On Sunday, the two boiled down their recent findings in an opinion piece for the New York Times.


According to King and Soneji, the Social Security Administration has grossly underestimated the money it needs for retiring Americans "to the tune of $800 billion by 2031, more than the current annual defense budget."


And if nothing is done, they say, the Social Security trust fund will run out two years ahead of current government predictions.


The professors say two major issues have led to these serious miscalculations.


The government’s forecasting methods for Social Security have barely changed since the program’s creation during the Great Depression -- "even as a revolution in big data and statistics has transformed everything from baseball to retailing."


And that outdated mode of forecasting, the professors note, has failed to take into account crucial factors about longevity -- especially the fact that Americans are living longer and healthier lives. Better treatment of cardiovascular diseases and a dramatic decline in smoking, they say, "are adding years of life that the government hasn’t accounted for."


The professors believe the nation faces some stark choices if Social Security is to be saved. Among the options they suggest are raising the retirement age to as high as 69 or 70, increasing payroll taxes, limiting annual cost-of-living adjustments and reducing benefits.


They also point to new research that suggests that retirement, while popular, may in itself reduce a person’s life span "by breaking lifelong routines and disrupting deep social connections." And with that research in mind, they wonder if retirement should be optional.


Given modern demographics and statistical analysis, professors Soneji and King think now is a great time to open a public debate about Social Security’s future. The constant political bickering in Congress may make this suggestion seem odd, they say -- but "the longer we ignore the problem," they warn, "the more disruptive any change will need to be to keep Social Security alive."


More on Money Now


996Comments
Jan 8, 2013 3:46PM
avatar

Make it so no one gets SS if they haven't paid into it for at least 20 years.

Jan 8, 2013 3:45PM
avatar
I agree with Slim674, except the money should be in a separate fund that the government can't touch, like it was way back when it first started. The upper limit pay in amount should be changed to "no limit" then the 1%ers will pay in too.
Jan 8, 2013 3:44PM
avatar

Seems like everyone is overlooking the obesity epidemic.  This should have a major effect on Social Security's longevity. 

Jan 8, 2013 3:44PM
avatar

I have been paying SS since I was 11 by the time I can collect (if they don't change it which I suspect they will) I will have worked for 56 years.  Yet I won't get anymore money per month than someone who averaged the same wage as I did and only worked 10 years.  That is a joke!! 

Jan 8, 2013 3:43PM
avatar
The solution is ultra simple.  If you never paid into Social Security, you get nothing.  I know of Women who draw half as much as their Husband's but never paid a dime into the system.  The illegal immigrants, the Vietnamese, etc. that draw from the system yet never paid into it.  And the US Government stop robbing the system to sustain their unthrifty habits.
Jan 8, 2013 3:43PM
avatar
The Government has been dipping into the Social Fund for over fifty years.  Ike was one of the first to 'borrow' from the fund to  build roads.  Nixon gave each of the Nam refugee families that were brought over here after the war $20,000.  Not one penny of which has been repaid. I am going to receive a $7.00 a month raise this year.  I wonder how much of a raise our illustrious politicians are giving.  their selves this year. 
Jan 8, 2013 3:43PM
avatar
I have a government pension coming AND I pay into social security. I take lower wages in order to have a pension. The simpler solution is to raise retirement age, stop investing our social security money on non-monetary investments like the military,and increase the amount each person puts in because, you may deny those that put little into social security, but taxpayers will still foot the bill. I call it forced savings. Those that say it is anti-American are the same ones who cry about freeloaders. But if people are forced to take care of their senior years, then there will be less ingidigent care programs. Social Security was a great idea, until politicians thought it was a bank.
Jan 8, 2013 3:43PM
avatar

When will people understand that Social Security is not funded from a "Trust Fund" at least not on the margins.

 

It is funded from taxes and spending (i.e. the fed running the printing presses) just like everything else.

 

There is no magic Social Security "Trust Fund".  No magic box that you open up and find your retirement money.  If you open that box in Washington with the SSTF label you will find a bunch of IOU's as Washington has been borrowing from the SSTF to finance its insane spending for many years. 

 

SS needs to be slowly dissolved through means testing until the only people who get it are truly elderly and in poverty.

 

Americans need to be able to keep the amount of tax now being paid to SS out of their paycheck every two weeks and actually invest it themselves.  As it is, every penny which has been put into SS so far has been spent and wasted by the federal government.

Jan 8, 2013 3:42PM
avatar
Social Security is not a "piggy bank" for the government to subsidize their spending...it is something that you as an American working class pay into.  Baenaer will tell you it is an entitlement....where does he get off tellling the American public this...it is something that you, me and all the other working class pay into.  If the government would pay back what they have taken from Social Security we would not be worried about.  I think if they want to take something away is take what our congress is getting in Free retirement and medical care.  (BTW if you spend only one term in office as a congressman you are ENTITLED to Free Medical & Retirement for the rest of your life and so is your spouse).
Jan 8, 2013 3:42PM
avatar
This is just the continuation of screw the boomers for their entire lifetime.  From their working years thru their retirement years.  Boomers have paid into this system their entire lifes and now it is time to collect?  and what? who? when? why? happened to the money the boomers have paid into it?
Jan 8, 2013 3:39PM
avatar
The do nothing President just gave the do nothing Congress a raise, they only care about themselves, I wish I could get their kind of raise and retirement benefits, and I actually work for a living at 69.
Jan 8, 2013 3:39PM
avatar

Eliminate the cap on social security pay.  You say you want the wealthiest to pay the most tax? Prove it.  Make everybody pay the 6.2% on all of their income.  Capped at ~113,000 annual? No more!

 

And don't say wealthy people don't get SS payments.  I'll call you a liar, I know better.

Jan 8, 2013 3:38PM
avatar
The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It's time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.


Maybe it's time to get this back!

Jan 8, 2013 3:37PM
avatar
Obama just signed a pay raise for Congress. Must be nice to get raises, full retirement benefits and private healthcare. These politicians are out of touch with reality. I would probably feel more liberal and less conservative if I knew the government was going to pay for everything in my future years. But the reality is I make to much for my kids to get much college financial aid but I am not wealthy enough to be able to write a check. My retirement plan is going to be whatever I can save up and my stock investments are not going to amount to much if our economy doesn't prosper in the next 10-15 years. Instead of raising my taxes it sure would be nice if our government would create an environment in which people want to invest in America.
Jan 8, 2013 3:37PM
avatar
until you cut the generous pensions of the federal workers don't even think about cutting my social security which I paid into for over 45 years. most of the federal and state workers did not even pay into their retirement plans
Jan 8, 2013 3:36PM
avatar
Take away all the perks from Congress, President and their families, did you know that children of congress do not have to pay back their school loans, isn't that wonderful.  Take all the pork out of the bills they pass and I believe most of the debt and SS would be solvent.  No travel for Presidents or congress, anyone traveling has to pay their own way and travel coach, just like regular people, they are not kings and queens, they are suppose to represent the ciitizens, but they are only representing themselves.  Put them on 401K that they pay for, OBAMACARE which they think is so great and move their government pensions that are liketime salaries to SS and I wish I had the time to figure all this, but I think the debt would be gone.  Eliminating all help to any country that is not our friend, build refineries that we can use for our oil instead of buying it from Arab countries, however, we buy more oil from Canada that any other country.  They are all using us the TAXPAYER to fund all that they want, and we are going down the drain.
Jan 8, 2013 3:36PM
avatar

Leave it alone, or give us what congress has.  They have a great plan.  But no, we won't see anything like that.  They take care of themselves only.  Our government needs a major overhaul from top to bottom.

Jan 8, 2013 3:36PM
avatar
the people of the united states have really got to wake up. Are goverment spends money like there is no tomarrow on some of the dumbest things. $10,000 a plate dinners at state captials to show the other states how good they are doing. sending billions to countrys that are attacking the usa to show them how good we are and most if not all of them really hate us. If you have ever traveled outside of the u.s. I am sure you have seen this first hand. We have forgotten that these people in are state and national goverment work for us not rule us we need to make them acountable for what they do.
Jan 8, 2013 3:35PM
avatar
someone wrote if you didn't pay in...citing disability situations, etc. you didn't pay/don't play.  It got me thinking.

What if you married and your spouse never worked?  Many wives that never have worked collect on their husbands S/S. Want to start a national hissy-fit,  float the idea of dropping that freebie.  After all, a married person pays no more into S/S than an unmarried one!  

So, I  propose:  want your SPOUSE covered ?  You opt for paying into the "FAMILY PLAN".  Want your underage KIDS to collect if you die?  That's the "FAMILY PLUS PLAN".  You wouldn't HAVE to opt for the extended benefit (s), but you could.  Isn't that how INSURANCE policies work?


Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?

MARKET UPDATE

[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.

The final week of August represented one of the quietest stretches for the stock market so far this year. The first four sessions of the week produced the ... More

MSN MONEY'S