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Academics warn that agency officials are using outdated calculations and have severely overestimated the money available for retirees.
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And that outdated mode of forecasting, the professors note, has failed to take into account crucial factors about longevity -- especially the fact that Americans are living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."
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When it was conceived, people did not live as long as they do now. It was also NOT supposed to be a retirees sole source of income. So the minimum age should go be raised gradually to 70 or 72. As advances in medicine continue, it may have to be raised further.
Also, we should continue to tax people above the current $113,700 limit to a max of $150,000. What we should NOT do is deny any high earners their benefits. Bill Gates pays into it and he should get something out of it as well.
Everyone needs to take a hit -
rich people - pay more taxes
old people - gotta be older before you get your Social Security and Medicare, and gotta go without your cost of living adjustment
war machine? - gotta starve that beast - the roman Empire fell largely by paying for these costs; let's not go out the same way
Health insurance? - stop thinking that you can treat this as a profit center and start providing basic care for reasonable rates
and everyone who gets subsidies, from farmer's sugar, milk, etc - learn to live without it!
Perhaps if they ever have the intestinal fortitude to address the many problems instead of playing political games that we are still paying them a salary, the ever suffering
Americans they claim to represent may get some results.
bu in the present political climate they don't seem to have anyother incentive but to protect their own interests. Witness the recent Hurricane Sandy relief bill they couldn't resist the overwhelming urge to add several billion dollars of pork to it. And this is what we are paying for?"
Not to worry. Built into ObamaCare are health care limitations (rationing - called "reductions in cost"). That will kill a bunch of old people. And the death panels really are there, just not by that name. ObamaCare will likely follow the British Liverpool Death Protocol and send all the consumers to the US equivalent.
SS was created and will die in a 100 year span. The government is not able to keep a funded program solvent. Obamacare will not last as long as SS. Obamacare will cause the nation to default and then the problems start.
How about putting accountability where it belongs! Who was it the "foisted" this crap nonsense 401k retirement program on the general public and "removed" the once widely accepted "defined benefit" retirement???? It was our corrupt US congress at the behest of the Corporate State who is their "puppet master."
A "defined benefit" program was supposed to be available to loyal corporate employees in conjunction with a 401k - not "instead of" a 401k. The Corporate State needed more profits to pay the elite their outrageous executive wages, so they took away our defined retirement and shoved this 401k crap down our throats. The Corporate State "sold us out" so the greedy CEO class could get paid like professional athletes and movie stars. The Corporate State "robbed" us of a decent retirement and now they are pushing to steal social security, too. Greed by the most overpaid, under performing, and under taxed group of CEOs on the planet Earth!!!
Having spent more time reading comments than I should have, I think we are in for a long, bitter slog before the politicians in Washington DC, take the proper corrective action. The reason I say this is because just here on this comment blog, there are so many different opinions about what went wrong and who is to blame.
We need first, a national discussion or seminar or something, to simply educate people on how SS was supposed to work, and how we got into this fix. And keep the politicians OUT of it, because most of them, past and present, belong at the defendant's table in my opinion.
Personally, as one who is close to collecting, but not quite there, I think the system should be scrapped for younger people, say below age 45 because long term, it is not sustainable unless we suddenly get a lot of younger workers paying in. But if younger people won't get the benefit, then they shouldn't pay in either, so I do not have a solution for how the benefits will be paid to those already retired and those close to it. The money collected once-upon-a-time is gone. It was spent by Congress. There is no where to "get it back" from unless the Treasury dept. sells bonds and turns the money over to the SS Admin. All this does is add to our debt which is at $16+ trillion.
I live off the Texas Municipal Retirement System. I retired early and thus am not bringing in big retirement money. I have a decent sum in a deferred compensation account and lucky to have no bills. Under SS, I am to get $350 per month when I turn 65 because I have enough quarters working and paying into the SS syatem before my municipal employment.. I will be penalized on the amount due to receiving a pension, but that's the whole idea.
SS was created to be a supplement to your personal retirement account that YOU created and funded. Those who expect to live on SS alone should have understood how/what SS actually is. My fathert worked 12 years before SS was founded. He only got $800 per month. due to the low amount he paid in. If not for his military pension, he would have been financially screwed.
Retirement planning is the responsibility of every working person. Those who do not plan,may be forced to work until they die. That's how it was a feww decades ago.
Raise the 100k cap on Social Security and the problems go away.;..poof!
In regard to pensions, we should have our pension funds guaranteed, just like the GOP is forcing down the throats of our postal service! How about corporations funding pensions 75 years into the future?
And since 401k's are a bad joke anyway, that rise and fall with the stock market, why would anyone believe their 401k investments would survive another Republican in the White House anyway?
Tying retirement income to the stock market is about the worst thing anyone could ever do. All it does is allow somebody like Eric Cantor to bet his money on a market downturn, and then make it happen! Does that sound familiar? It's exactly what he did!
Got to love the GOP brainwashers who try to blame the Democrats and the poor for our debt! Anyone who thinks our living wages are caused by the poor is a tea party wacko!
Who gets all the subsidies, all the off-shore tax-breaks, all the money for not growing crops? It sure isn't the poor farmers! And the poor do not, like the top 280 corporations, pay no taxes, and receive a half a trillion in government assistance!
Really, when we think about it, maybe our war should be on corporate welfare and the loopholes that have done nothing to help our economy for decades, while our wages have flat-lined!
Let's start with the off-shoring loopholes that reward corporations for sending our factories and jobs to Communist China, killing American jobs, while allowing the profits to be hidden in tghe Cayman Islands. There's over a trillion right there!
The ignorance of the american people is astounding. The facts are that SS is not sustainable in it's current format. Some reform is necessary in order for it to remain sustainable. Yet, the minute anyone mentions reform, the vast majority of the liberal politicians stand up and claim that whoever is proposing reform is actually trying to eliminate it or take it away from the elderly. The result of that, is that nothing is done and we continue marching toward insolvency of SS.
It's time that the educated and reasonable among us stand up and say, enough is enough and demand congress begin an open and reasonable debate on SS. I have several ideas on what could be done, but, based on the fiscal cliff negotiations, I don't think anything meaningful or productive will be done.
I believe the liberals are intentionally doing nothing, waiting for the system to be on the verge of collapse and use the excuse that action must be taken immediately to prevent millions of people from starving/dying/being kicked out on the street/etc. They will continue to used class warfare to divide us and the less informed masses will fall in line with whatever the benevolent politicians come up with. Ultimately, the plan will involve taxing the so called rich even more.
Please comment on my plan below:
1. Starting in 2014, the age to begin withdrawing SS is moved to 65.5 years of age. for the next 9 years, 6 months is added to that age, until the age becomes 70.
2. Starting in 2014, transition all funding for non retirement items to another distinct, easily identifiable budget line item with separate funding not part of the SS with-holding.
3. Starting in 2014, all new Federal employees begin contributing to SS in the same percentage as the private sector. There will be no more pensions for new Federal employees. This part will be very hard.
4. Starting is 2014, all current Federal employees will begin contributing 1% of their income to SS, once their contribution equals the percentage the private sector is paying in, they will transition over and begin collecting SS. The Federal Gov't will contribute to SS the amount that would have been paid in pensions. This way, the money that would have been paid is pensions would simply move from one agency to another. This part will be very hard.
5. Since each state handles pensions independently from SS, Federal mandates to the states can't be made, we will have to pressure our elected representatives to transition other public sector pensions to SS in the same manner. This part will be very hard.
6. The military pensions will also be transitioned to contributing to the SS system.
7. Ultimately, the above rules will apply to everyone, there will be no special treatment for politicians, teachers, fire fighters, soldiers, or any other group of people.
Let me know what you think!
Just look at Title IV of the social sec. act. County attorneys,lawyers and judges are getting rich. All one has to do is look at the child support system.
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[BRIEFING.COM] There was plenty of excitement in the stock market on Wednesday following the FOMC decision to taper its asset purchase program. There wasn't much excitement, however, on Thursday, which featured the added news that the Senate passed the two-year budget agreement. After some early gyrations, the major indices held to pretty tight trading ranges throughout the session and ended the day little changed.
All in all, it was a pretty good showing given the scope of Wednesday's ... More
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