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Academics warn that agency officials are using outdated calculations and have severely overestimated the money available for retirees.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And that outdated mode of forecasting, the professors note, has failed to take into account crucial factors about longevity -- especially the fact that Americans are living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."
More on Money Now
- Self-driving cars roll into CES
- College football wins more fans and ad dollars
- Sushi mania: 489-pound tuna sells for $1.76M
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.
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.
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.
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.....
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:
2031? HA!!! That just proves that "acadamisions" and MSN are still good for a laugh.
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.
[BRIEFING.COM] The S&P 500 trades lower by 0.2% with one hour remaining in the trading day. Stocks slumped out of the gate amid disappointing trade data from China, but were able to erase about half of their losses thanks to the relative strength of financials (-0.1%), health care (+0.2%), and technology (-0.1%).
The benchmark index notched its low less than 90 minutes into the session and then returned to the middle of its trading range by 11:30 ET, where it continues trading at ... More
More Market News
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'