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Academics warn that agency officials are using outdated calculations and have severely overestimated the money available for retirees.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And that outdated mode of forecasting, the professors note, has failed to take into account crucial factors about longevity -- especially the fact that Americans are living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."


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999Comments
Jan 21, 2013 2:13PM
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they will always pay out less than they take it. always.
Jan 21, 2013 2:12PM
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you know why insurance companies never lose money? because the statistics never lie. they know exactly how long their policy holders will live. the ss admin has this knowledge too.
Jan 19, 2013 5:15PM
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After Searching the internet & I found some Post On The Subject Of Social Security Here Is some VERY SIMPLE HIGH SCHOOL MATH 

THE ONLY THING WRONG WITH THE GOVERNMENT'S CALCULATION OF AVAILABLE SOCIAL SECURITY IS THEY FORGOT TO FIGURE IN THE PEOPLE WHO DIED BEFORE THEY EVER COLLECTED A SOCIAL SECURITY CHECK!!!

WHERE DID THAT MONEY GO?

 

Remember, not only did you and I contribute to Social Security but your employer did, too. It totaled 15% of your income before taxes. If you averaged only $30K over your working life, that's close to $220,500. Read that again. Did you see where the Government paid in one single penny? We are talking about the money you and your employer put in a Government bank to insure you and I that we would have a retirement check from the money we put in, not the Government. Now they are calling the money we put in an entitlement when we reach the age to take it back. If you calculate the future invested value of $4,500 per year (yours & your employer's contribution) at a simple 5% interest (less than what the govt. pays on the money that it borrows), after 49 years of working you'd have $892,919.98. 

 

If you took out only 3% per year, you'd receive $26,787.60 per year and it would last better than 30 years (until you're 95 if you retire at age 65) and that's with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4% per year, you'd have a lifetime income of $2,976.40 per month.

 

Another thing with me.... I have two deceased husbands who died in their 50's, (one was 51 and the other one was 59 before one percent of their social security could be drawn. I worked all my life and am drawing 100% on my own social security). Their S.S. money will never have one cent drawn from what they paid into S.S. all their lives.

 

THE FOLKS IN WASHINGTON HAVE PULLED OFF A BIGGER PONZI SCHEME THAN BERNIE MADOFF EVER DID.

 

Entitlement my foot, I paid cash for my social security insurance! Just because they borrowed the money for other government spending, doesn't make my benefits some kind of charity or handout!!

 

Remember Congressional benefits? --- free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days. Now that's welfare, and they have the nerve to call my social security retirement payments entitlements?

 

We're "broke" and we can't help our own Seniors, Veterans, Orphans, or Homeless. Yet in the last few months we have provided aid to Haiti, Chile and Turkey. And now Pakistan......home of bin Laden. Literally, BILLIONS of DOLLARS!!!

 

Our retired seniors living on a 'fixed S.S. income' receive no additional federal aid nor do they get any financial breaks, while our government and religious organizations pour hundreds of billions of $$$ and tons of food to foreign countries!

 

They call Social Security and Medicare an entitlement even though most of us have been paying for it all our working lives, and now, when it's time for us to collect, the government is running out of money. Why did the government borrow from it in the first place? It was supposed to be in a locked box, not part of the general fund.

 

Sad isn't it?
Jan 17, 2013 12:16AM
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The Dartmouth Institute is funded by "Conservatives". That often means the Koch Brothers, who want to destroy Social Security, Medicare and anything that takes money out of their $50 Billion dollar holdings. Apparently they have figured a way to "take it with them". They fund many "Conservative Groups" and have infiltrated State Legislatures, Think Tanks and Research organizations across the Country. They are also behind the push to privatize Education.  Go to your local library and order "Koch Brothers Exposed", a Documentary that will open your eyes and mind.

There is nothing wrong with Social Security that a little tweaking wouldn't cure-.i.e. eliminating or raising the cap. We should not raise the age of retirement which is 67 an age at which most people are dealing with more than one health issue. Besides there are kids out there waiting for those jobs. Fear and disinformation are the main tools of the radical right wing (so called Conservatives) who through large Corporations own the media and they are fully supported by Wall Street whose greed knows no limits. Write your Legislatures and Obama. Thank  Harry Reid for his refusal to back down on Social Security during the so called Fiscal Cliff--a media propaganda ploy.

Jan 16, 2013 10:52PM
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They already begin to tax the social security benefits of couples whose combined income in retirement exceeds 32000 and tax 85% of the benfits for couples whose combined income exceeds 44000. Half of social security goes into the combined incometest. Essentially all income except from Roth IRAs are included in the combined income test. If you cut their benefits, you cut the tax received.
Jan 16, 2013 9:44PM
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WE NEED TO SEND OBAMA AN BUSHES ON VERY LONG VACTION, LIKE iRAN.THEIR NOT DOING THE AEMICAN PEOPLE RIGHT. IT MAKE YOU THINK THEY FOR.
Jan 16, 2013 6:36PM
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Remove all those on SSI that have never paid in, $710 a month for a kid with ADD??? Really???  If the workers paying into SS knew how much of the money is given to those that have never paid in we'd all demand change but most people don't have a clue.  I process Food Stamp, Medicaid and TCA applications and it's amazing the number of household collecting multiple payments for children with learning disabilities that attend school with no issues.  Those payments stop when these same children turn 18 and they deal with it so why should they ever be getting SSI? If you have a child in a wheelchair that has high expenses need to care fo them then it's understandable you might need assistance but these kids don't have these type of expenses.
Jan 11, 2013 10:14PM
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Reform Social Security To Allow All Who Have Completed Their Quarters To Withdraw Their Monies (All or Partial) Untaxed!

Say yes to my petition on the whitehouse site

 

Jan 11, 2013 6:24PM
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it seems to me that the one solution no one has put forward is that if the Fed payed back the money it "borrowed" from Social Security in the first place, we would not be having these discussions on how to "save" Social Security.  It was set up as a trust!!!!!!!  The Fed broke that trust and the trust of the people.  If I did that to my employees, I would be arrested, incarcerated, and made to pay restitution.  SO...???
Jan 11, 2013 2:33PM
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well folks i have an very good idea why dont we all have a very good revolution.

i mean a very good revolution. but no guns. we and i just refuse to pay any taxes to the us gov.

if then congress cant get our money then they can go home to live.

i know that if we do this then we all go to jail but how is the gov. going to do this if 160,000,000 people

refuse to pay this outrages taxes there is not enough land large enough to put us in

since this means that the congress & the gov. can not get any money to build this enormus building

there are other things that i want to express my feelings. but only now WE ALL MUST STOP PAYING OUR TAXES TOGETHER WE WILL WIN THIS REVOLUTION .

Jan 11, 2013 8:37AM
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After 50 years of hard work & good pay,a series of back operations rendered me disabled.I have two issues when I read posts that even consider lowering benefits.I have lowered my standard of living considerably,and have 300 mo to cover variable expenses and (groceries and fuel)Many months  when employed I didn't even NOTICE the small deduction for SS.I was schocked when told I was to get a raise for the last 3 mos of they year,NO SOCIAL SECURITY DECUCTIONS Really,with the money I made,I this was hardly an issue.I believe all citizens should be taxed w/o any cieling.Higher incomes allow investments,dividend income as  well as 401K's.A 250 K/yr individual would have other assets during retirement.Every one is not a disability bandit.Those of you who think a non-contributor should be exempt from benefits?Think about the child that had  the misfortune of being born profoundly retarded. Should the Social security withdraw her ability to live in an institution?I firmly believe that economic cycles are slowing the system down,and we need to review and "tweak"the policies,but the most money was taken(re-allocated) by our own government,and therefore went,and still flows,into the pockets of the opportunistic politicians.This country has become the land of the corrupt oportunistic,anyone can play A different skew on"The promised land of opportunity!'

Jan 10, 2013 11:24AM
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Lots of  people kids or over the age of and grown, and there are some people that don't have kids.
Jan 10, 2013 12:04AM
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government needs to keep out of social security, payback what they have borrowed with interest, and cut there Salaries in half for what they do for us or better yet. Make there new salary Social Security and see how the real people life................
Jan 9, 2013 9:40PM
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Outlaw retirement altogether except for the rich 2%. They've earned it by providing high paying jobs for the hoi polloi.
Jan 9, 2013 9:19PM
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yes kids do get ss and if their parents know how to work the system the parents can quit work and get paid by the government to take care of their own kids. I know this is true cause i have a cousin who does this. all of us people who go to work everyday need to band together and do something because only the working people are going to suffer(more than we already do) in later years.  and also it bugs me that people on foodstamps buy big juicy cuts of meat while i look for clearance hamburger.  I dont want anyone to go hungry but a lot of people who have never had a job make a living selling their excess food. or they let someone use their card and pay them 50% cash for food.

Jan 9, 2013 8:46PM
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If the social security funds are billions short it is because those in government, elected and/or appointed, are stealing from the fund.  They have and are redirecting monies that were paid into the government for the sole purpose of funding social security were used to finance wars, welfare or whatever.  Those responsible for making the decisions to divert the monies should be arrest and confined.  If they are legislators, they should receive more harsh treatment because in addition to misappropriation of funds they have broken their oaths of office. 
Jan 9, 2013 8:24PM
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Jan 9, 2013 8:09PM
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WHAT  ABOUT ALL  THE 

 MONEY THE GOV.  HAS TAKEN OUT AND NOT REPLACED !!!!   LIES  AND MORE  LIES !!!!!!!!!!!!!!THEY CAN  NOT  BE  TRUSTED  ......................................................................................

 

Jan 9, 2013 7:54PM
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I'm 56 and all of the ideas they mention I could agree with. IF and only IF the money going into Social Security is somehow protected from the spend thrift politicians in the legislative and executive branches that want to "borrow" it to fund whatever pork barrel projects they think will get them elected / re-elected.
Jan 9, 2013 7:52PM
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I hear the BS about SS not meant to be a retirement fund, Then why is the rail road exempt from paying SS when they pay into RR retirement?  This Country doesn't give a rats **** about its seniors!
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