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Academics warn that agency officials are using outdated calculations and have severely overestimated the money available for retirees.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And that outdated mode of forecasting, the professors note, has failed to take into account crucial factors about longevity -- especially the fact that Americans are living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
This world has gone crazy. Some one need's to wake up. They have been sleeping to dang long
This article is complete BS. I guess they think we’re stupid. The truth is: The Federal Government has used our Social Security Funds for things other than Social Security. The baby-boomer generation of Americans have paid into the SocSec Trust Fund for 30-40 years and our employers have matched it too. Until 2012 this amounted to the tune of 12.4 percent of every paycheck. If these collections were saved compounded at 5-6 percent, there would me more than enough funds available.
Our money was, and continues to be, stolen from the Social Security Trust Fund. It’s the thievery and spending stupid!
Uhhhh . . . a "demographer" and a "professor of government" have opinions about Social Security actuarial calculations. Wow! Next things you know and MBA will have an opinion on theology.
The statisticians who work with the Social Security numbers really do know what's going on. These 2 hacks are a pair of rightwingnutjobz with political propaganda to sell.
Greed, Lawyers, and Politicians.
....the regime in washington dc has been partying off ss funds ever since president johnson transferred ss lmonies over to the general fund....
Seems to me that just paying in is not the issue. The reality is that the money is spent I know it and my parents and grand parents knew it as well. As we elect folks that continue to spend it on other things than the payouts to the program participants. I have had a job for my whole adult life. In the first couple years when I made $2.50 per hour my tax paid for the first couple years will not cover a couple months of the projected amount I am to receive when I retire. Since none of the money has gained any interest the rest is paid by those currently paying in. Then toss in those who have been retired for a while complaining about not getting a raise,. The same folks that will admit they knew the money was being spent all along. All this and we then wring our hands asking where did the entitlement expectation come from. May God help us since we cannot even be honest with ourselves.
...the gov in washington dc has been stealing ss funds ever since president johnson transferred monies over to the general fund...congress has been partying ever since....
It is absolutely ignorant to force my generation and coming ones to not only pay more in but expect us to work longer for a broken system that is unlikely to even give us a 1:1 return on the money they take from us. I come from a family with healthy problems and likely won't ever make it to 80, what gives these politicians the right to take my money and my retirement away from me to give money to people who didn't invest in the program fully themselves?
There needs to be an opt out option for social security, give me back the money you've taken and don't take any more and I won't claim any benefits at all. I will be responsible for my own retirement which is likely to be the case anyway since by the time I'm 65 (2045) benefits will only be to 72 year olds and at 60% of what they are now. What a ****ing joke.
if we removed all of the illegals, who have never paid into the SS and kept that money and took away all of the money paid to people who have never worked and put into the system, then we would have more than enough money to be paid to the people who paid into the system. I was always taught if you put something in then you get something out. simple but it works.
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 stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed. The two indices posted respective losses of 0.8% and 0.6% for the week.
Equity indices were pressured from the get-go after several heavyweights disappointed the market with their earnings and/or guidance, which led to some broader profit-taking. After ... More
More Market News
The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
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'