Want to know how much of the Social Security deficit would be fixed by increasing the retirement age? Raising taxes? Cutting benefits? Check out this page constructed by SSA's Office of the Chief Actuary, which provides details on a wide variety of ways to address Social Security solvency.
Friday, September 11, 2009
SSA Actuaries Update Estimates of Solvency Provisions
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Major problem is the same old problem since 1937. Using a solvency period of 75 years does not address nor does it cover the entire liability generated during 75 years. What it does is to include all revenues that is generated during 75 years while eliminating or leaving out those liabilities of those born after 2017, but who earn SS wage credits that determine SS-OASI benefits in year 2076. In addition the average life span at age 67 is 21 years. This means a person will live to age 88. This means that using a 75 yea solvency period leaves off those who retired after 2063 who will live past the end of the 75 year solvency period.
From a historical perspective, this may not sound like a big deal. However, like an ice berg, over 75% of its mass is hidden under the water. Social Security is actually using the cost of just 54 cohorts, while using the revenue of 75 cohorts.
As for raising the retirement age, yes this will work, but is it fair? Working more years, paying more SS taxes to get the same promised benefits throws good money after bad. It increases the burden substantially on future cohorts.
As for changing the SS-OASI benefit, this is nothing more than a benefit cut. What they are doing is legislating the benefit cut so that they can say the beneficiary is getting 100% qualified benefits under current law. They are repackaging, no different than a company that reduces the size of the ice cream container from 64 oz, to 56 oz to 498 oz. yet charging the same price.
As for phasing in these changes, what is the real purpose? It is to gain support from those who are not affected. They did this in 1983 and found the age at which voter participation was minimal and set the changes in retirement age to take affect not in five or ten years, but over 20 years.
If voters and workers fall for this con again, then we deserve to loose it all. Remember A. J. Altmyer in 1943 said that if the current payroll tax was not raised from 2% to 8% immediately, some future generation would pay far more for their benefits than they are worth. Anyone born after 1938 is paying more. Those born after 1985 will pay the most and get the least. If you have children born after 1985, the most they can expect is 29 cents in benefits for each dollar of tax and interest paid (US Treasury rate). Is this what we want to do to our children and grandchildren?
Shame on us if we let this happen!!!!
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