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Academics warn that agency officials are using outdated calculations and have severely overestimated the money available for retirees.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And that outdated mode of forecasting, the professors note, has failed to take into account crucial factors about longevity -- especially the fact that Americans are living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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998Comments
Jan 8, 2013 5:06PM
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I believe the IOU's come due in 2013 or maybe 2014. They really do exist! I think congress is too busy worrying about the next election cycle to do what's right for the American public. If it doesn't get you votes  or will make you loose votes they avoid the issue no matter how important. If we were as irresponsible in our jobs as they are in theirs we would all be fired! Maybe we should get a recall petition together and throw them out. Of course we would still have to deal with the big money behind it all, but those power brokers might get the idea that we are fed up. And who knows maybe we would get someone in Washington who cares about the American people, not just their own  welfare. You do remember that in the last month they almost gave themselves a raise, but  at the last minute thought better of it???
Jan 8, 2013 5:06PM
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SS was never meant to be a retirement fund!  It is a security net for the poor.  Shame on all the people who chose not to save for retirement. Too many people think it is a reitrement fund.  The people on the hill need to get to work and fix this thing.  The system was not built to pay out to so many retirees.  As life expectacies continue to grow, so do the number of people collecting SS.  The numbers just don't add up.  Since 1937 the recipent age for full benifit only rose by 2 years but the but life expectancy has almost increased by 20 years!  Social Secuiry not Social Retirement Fund.  We all pay too much into SS. Especially those who just started in the work force and will probably never see a dime at this rate.
Jan 8, 2013 5:04PM
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Where in the Hell to they find morons like this???  Has either of these morons worked for 45 to 55 years paying into social security along with their employers. I just retired this year and am still working part time and have been paying into it now for 46 years. And now they want people to work until they are 70. What MORON!!!!! The last time I received a statement from social security which was over 5 years ago myself and my employers had paid over $135,000 into the system. If these morons had invested my money for me and it returned just a 5% return over the years I would have more money than I would know what to do with. They want to fix it, quit borrowing from it and take the cap off of the amount people make and raise social security taxes 1/10% per year for the next 10 years and social security will be around for a long time. And one last thing get all of the free loaders off of the system and it will help also.
Jan 8, 2013 5:03PM
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One of the concerns people opposing the Affordable Health Care Act had was that if people were allowed to be healthier due to healthcare being more accessible and affordable, that they'd live longer and be on both Social Security and Medicaid for more years than if they just went ahead and died. 
Although it sounds crass, corporations make those kinds of decisions all the time with estimating how many deaths per million or some denominator they could accept for weakening the safety of a product, doing less testing, or lobbying for protections in legal loopholes to save a few bucks and get bigger bonuses.  

I think people living longer healthier lives is a good thing and hope to live a long healthy life myself, so we should find a way to make it work, but then I'm not a CEO. 

Jan 8, 2013 5:01PM
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Everyone seems to have an opinion, and all purport to be experts, yet the conclusions conflict. It is no wonder the American populace has doubts about everyone, and nearly everything. 


Neither one of these people work in the government, which may be comforting to some,  but I would put forth that they do not have the full facts, perhaps only available to those within government. 


There is also not one mention of the problems generated by the fact that when the Social Security funds have been looted, by both sides of the aisle, in order to make the deficits look better, no one is speaking of forcing a payback into the coffers of the "entitlement". Social Security would have been self-sustaining had these lootings not taken place, or been repaid with the interest which would have been generated by the invested funds.


Just yesterday, in an article on Huffington Post, Robert Reich, a Clinton administration cabinet holder, posted why the Social Security need for cuts is a hoax. [http://www.huffingtonpost.com/robert-reich/entitlement-reform_b_2421991.html] . Since he was the Sect of Labor, the man is probably working from a better knowledge than outsiders.

Jan 8, 2013 5:01PM
Jan 8, 2013 5:01PM
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"to the tune of $800 billion by 2031, more than the current annual defense budget."
Would it not be logical to scrutinize the Defense Budget too? Possibly it is much easier to push our Senior Citizens around than our Military with guns and tanks and healthy young troops and bombs - BIG bombs, lol.

Seriously, what exactly is the U.S. Defending if not those that made it possible? Doesn't make much sense to protect a bunch of poor old people after pulling the rug out from under them. Oh wait, that's eventually pretty much all of us except maybe the top 20%! As we become more and more an Economic Empire than a United (using the term loosely) States of  "Truth, Justice, and the American way," the underlying moral principles necessary to make and keep this a Great nation rather than a Rich nation are being traded away for dollars, which makes NO sense.
Jan 8, 2013 5:00PM
Jan 8, 2013 4:57PM
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When people will start using their head instead of their heart in voting things possibly might get better.  We are still climbing a hill and not even close to the real Cliff that we will be going over.  Too many people  voted on "emotion", I mean "time for a change",

I mean"Forward!" ........drink some more Kool Aid kids.....

Jan 8, 2013 4:56PM
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Oh...I get it...they think it shouldn't be optional...okay...work til ya die!  Great... as long as all of us do...including politicians, rich people,...etc....
Jan 8, 2013 4:55PM
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Maybe we had better move to Mexico as soon as we can.
Jan 8, 2013 4:54PM
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Do not change Soc Sec COLA from CPI-W to C-CPI-U; it would reduce the average benefit by $40/mo to $65/mo in 10 years.

 

I created a petition for this on We the People,  a new feature on WhiteHouse.gov, and I need your support .  Will you add your name to mine?  If this petition gets 25,000 signatures by February 07, 2013, the White House will review it and respond!

Click on this: 

 

Thanks

Jan 8, 2013 4:54PM
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Umm....I thought retirement already was 'optional'..?
Jan 8, 2013 4:53PM
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Stop the government borrowing from the social security fund and all republicans and democrats have done it.
Jan 8, 2013 4:52PM
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It is only the media and govenment who keep referring to  the funds as a 'trust' acct.  It started that way till the gov't needed the $$  for a war as in Vietnam.  It was then transferred into the general acct and never put back.  I think slim 674 has a great idea...those guys aren't earning their $$ most of the time, anyway!  And while we are at it, it's about time to limit their time in the House and Senate, just like the President must.  That'll save lots  of bucks, too
Jan 8, 2013 4:51PM
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I recently learned that a freinds daughter is receiving SS payments because the father turned 65. She will receive these payments until she reaches age 18. I know for a fact that she does not need the money. Is this truely a SS benefit and if so why? I know there are other SS benefits that go to people that are not retired. Why can't these benefits be stopped.
Jan 8, 2013 4:51PM
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Me I get  to watch some  and i've worked 45 years of my life just to watch people that pissed their lives away as drug addicts and alcoholics get money they never earned. Me i have to get legal help to get disability for osteoarthritis with synovitis in both hip ! Damn how dare i want to collect...Shame on me..
Jan 8, 2013 4:50PM
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2031? HA!!! That just proves that "acadamisions" and MSN are still good for a laugh.

Jan 8, 2013 4:48PM
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I came from South Africa. There is no such thing as retirement. People work until they die.
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