An Actuarial Perspective on the 2011 Come to this Capitol Hill briefing to gain insights on the 2011 Social Security Trustees Report and hear about reform options that, if enacted now, could help address Social Security's long-term financial soundness. The briefing will include a presentation of new financial projections from the 2011 Social Security Trustees Report, and a discussion of options available to policymakers to reform Social Security. Find out: Speakers DETAILS Capitol Hill Briefing: An Actuarial Perspective on the 2011 Social Security Trustees Report Space is limited—reserve your seat today for the May 26 Capitol Hill briefing. QUESTIONS Please contact Jessica Thomas at the Academy (thomas@actuary.org; 202-223-8196) with questions. American Academy of Actuaries
Social Security Trustees Report
Chairperson, Academy Social Insurance Committee
Associate Actuary, Milliman Inc.
Member, Academy Social Insurance Committee
Chief Actuary, Social Security Administration
May 26, 2011
10:00 a.m. - 11:00 a.m.
Dirksen Senate Office Building, Room G-11
This briefing is hosted by the American Academy of Actuaries, a 17,000-member professional association whose mission is to serve the public and the U.S. actuarial profession. The Academy assists public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.
Thursday, May 26, 2011
An Actuarial Perspective on the 2011Social Security Trustees Report
Upcoming event: Envisioning the Future of Social Insurance in a Competitive Economy
Envisioning the Future of Social Insurance in a Competitive Economy Policy Seminar in Conjunction with NASI's 25th Anniversary Celebration Is social insurance the best way to manage the risks associated with health, retirement, and the vicissitudes of the labor market in the new economy? Which risks should be borne by individuals, which resolved by the market, and which pooled across society? And how can these risks be managed in a way that promotes economic dynamism and growth? June 8, 2011 • 1:00–4:30 pm Registration for this event is free Agenda Welcome Lisa Mensah, The Aspen Institute Keynote: Social Insurance in a Competitive Economy Jacob Hacker, Yale University Managing Risks in the New Economy and Demography Moderator: William Rodgers III, Rutgers University Securing Our Health: Constraints and Possibilities Social Security Plus: Making Retirement Less Daunting and More Secure Children At Risk: How Can Social Insurance Do More? Discussants: Kathleen Connell, University of California Retirement Security Institute The Challenge for Policymakers and the Media: Changing the National Conversation Maya Rockeymoore, Global Policy Solutions Following the policy seminar, please join NASI for an evening event celebrating distinguished honorees for their outstanding contributions to America's social insurance programs – and celebrating the vital role of social insurance for economic security and a vibrant economy. Click here for tickets and more information about the celebration event.
Washington Court Hotel • 525 New Jersey Avenue NW • Washington, DC
Trudy Lieberman, Columbia Journalism Review
Wednesday, May 25, 2011
Agenda for Annual Retirement Research Consortium Conference; August 4-5
"Innovations in Retirement Security" 13th Annual Conference of the Retirement Research Consortium National Press Club, Washington, DC Pre-register at: http://crr.bc.edu/RRC_conference_registration.html Thursday, August 4, 2011 8:00-8:30 Registration and Coffee 8:30-8:45 Welcoming Remarks 8:45-10:15 Panel 1: Disability The Impact of Unemployment Benefits Extensions on DI Applications and Approval Rate Matthew Rutledge, Boston College (BC) Discussant: Robert Weathers, Social Security Administration (SSA) What Are the Real Application Costs of SSDI? The Effect of Waiting Time on Labor Force Participation and Earnings Kathleen Mullen and Nicole Maestas, RAND, David Autor, MIT, and Alexander Strand, SSA Discussant: Richard Burkhauser, Cornell University A Longitudinal Study of SSDI Enrollment in the Spine Patient Outcomes Research Trial Ellen Meara and Jonathan Skinner, Dartmouth College Discussant: Fabian Lange, Yale University 10:15-10:30 Break 10:30-12:00 Panel 2: Health Costs Why Don't Retirees Insure Against Long-Term Care Expenses? Jeffrey Brown, University of Illinois, Gopi Shah Goda, Stanford University, and Kathleen McGarry, UCLA Discussant: James Poterba, MIT The Medicare Part D Expansion and the Health of Older Americans Gary Engelhardt, Syracuse University and Jonathan Gruber, MIT Discussant: Paul Van de Water, Center on Budget and Policy Priorities 2 Examining Consumer Preferences for Medicare Part D Prescription Drug Plans w/Conjoint Analysis La' Marcus Wingate, University of Tennessee (Dissertation Fellow) Discussant: Kosali Simon, Indiana University 12:00-1:15 Box Lunch Luncheon Speaker (TBD) 1:15-2:45 Panel 3: Financial Crisis The Incidence and Implications of Collecting Social Security Early During Recessions Richard Johnson and Owen Haaga, The Urban Institute Discussant: Joyce Manchester, Congressional Budget Office Personality and Response to the Financial Crisis Angela Lee Duckworth, University of Pennsylvania and David Weir, University of Michigan Discussant: Brent Roberts, University of Illinois The Effects of the Financial Crisis on Actual and Anticipated Consumption Michael Hurd and Susann Rohwedder, RAND Discussant: William Gale, The Brookings Institution 2:45-3:00 Break 3:00-4:30 Panel 4: Demographic Shifts and Retirement Income Demographics, Pension Reform, and Labor Markets, Phase II: Human Capital Investment Axel Börsch-Supan and Edgar Vogel, University of Mannheim, and Alexander Ludwig, University of Cologne Discussant: Gary Koenig, AARP Public Policy Institute Effects of Legal and Unauthorized Immigration on the Social Security System Hugo A. Benitez-Silva and Eva Carceles-Poveda, SUNY Stony Brook, and Selcuk Eren, Bard College Discussant: Gary Burtless, The Brookings Institution Interdependent Durations in Joint Retirement Decisions Áureo de Paula, University of Pennsylvania (Steven H. Sandell Scholar) Discussant: Richard Johnson, The Urban Institute 4:30-6:00 Reception Friday, August 5, 2011 8:00-8:30 Registration and Coffee 8:30-10:00 Panel 5: Older Workers The Changing Causes and Consequences of Not Working Before Age 62 Barbara Butrica and Nadia Karamcheva, The Urban Institute Policy Interactions between Increases in the Full Retirement Age and Age Discrimination Laws David Neumark, University of California, Irvine Discussant: Joanna Lahey, Texas A&M University Health Shocks and Disability Transitions among Near Elderly Workers David Cutler, Harvard University, Ellen Meara, Dartmouth College, and Seth Richards-Shubik, Carnegie Mellon University Discussant: David Weaver, SSA 10:00-10:15 Break 10:15-11:45 Panel 6: Plan Design The Determinants and Downsides of Default Behavior Jeffrey Brown and Scott Weisbenner, University of Illinois Discussant: Joseph Piacentini, U.S. Department of Labor Target-Date Funds and the Pension Protection Act of 2006 Pierluigi Balduzzi and Jonathan Reuter, BC Discussant: Mark Warshawsky, Towers Watson Can We Put Social Security on Auto-Pilot? Barry Bosworth and Kent Weaver, The Brookings Institution Discussant: Mauricio Soto, International Monetary Fund 11:45-1:00 Box Lunch Luncheon Speaker (TBD) 1:00-2:30 Panel 7: Distributional Issues – Social Security and Health Programs How Does the Personal Income Tax Affect OASI Progressivity? Norma B. Coe, Richard W. Kopcke, and Alicia H. Munnell, BC Discussant: Stephen C. Goss, SSA The Effects of Changes in Women's Labor Market Attachment on Redistribution under the Social Security Benefit Formula Alan L. Gustman and Nahid Tabatabai, Dartmouth College, and Thomas L. Steinmeier, Texas Tech University Discussant: Olivia Mitchell, University of Pennsylvania Income Inequality and Medical Expenditures Serdar Ozkan, University of Pennsylvania (Dissertation Fellow) Discussant: Anthony Webb, BC 2:30 Closing Remarks
New papers from the Social Science Research Network
"Social Security Benefits Formula 101" Orange County Lawyer, May 2011 FRANCINE J. LIPMAN, Chapman University - School of Law This paper is a comprehensive presentation of the Social Security benefits formula including a brief discussion of the relatively recent means testing for Medicare premiums. "Military Veterans and Social Security: 2010 Update" Social Security Bulletin, Vol. 71, No. 2, pp. 1-15, 2011 ANYA OLSEN, Government of the United States of America - Social Security Administration - Office of Retirement Policy More than 1 out of 5 adult Social Security beneficiaries has served in the military, and veterans and their families comprise 35 percent of the beneficiary population. Policymakers are particularly concerned with the economic well-being of veterans and their family members, who may receive benefits through several government programs. Using data from the March 2010 Current Population Survey (CPS), this article presents the sociodemographic characteristics of the veteran beneficiary and the total veteran populations. Relative to all Social Security beneficiaries, veteran beneficiaries are older; greater proportions are men, are married, and have higher educational attainment; and fewer are poor or near poor. Veteran beneficiary demographic trends are examined by drawing comparisons with findings from the March 2000 CPS and the March 2004 CPS. Using data from the Department of Veterans Affairs VetPop2007 projection model, this article also describes the growing proportions of women and minorities in the veteran population. "Who Never Receives Social Security Benefits?" Social Security Bulletin, Vol. 71, No. 2, pp. 17-24, 2011 KEVIN WHITMAN, U.S. Social Security Administration We estimate that about 4 percent of individuals aged 62-84 in 2010 will never receive Social Security benefits. This article describes the prevalence, demographic characteristics, and economic well-being of this group. The never-beneficiary population generally has lower education levels and higher proportions of women, Hispanics, immigrants, the never-married, and widows than the beneficiary population. Never-beneficiaries have a far higher poverty rate (about 44 percent) than current and future beneficiaries (about 4 percent). Ninety-five percent of never-beneficiaries are individuals whose earnings histories are insufficient to qualify for benefits. Late-arriving immigrants and infrequent workers comprise the vast majority of these insufficient earners. Late-arriving immigrants have a poverty rate of about 43 percent, and are particularly reliant on income from household coresidents. Infrequent workers have a poverty rate of about 57 percent, and are particularly reliant on Supplemental Security Income.
Email: lipman@chapman.edu
JAMES E. WILLIAMSON, San Diego State University - College of Business Administration
Email: james.williamson@sdsu.edu
Email: anya.olsen@ssa.gov
SAMANTHA O'LEARY, Office of Retirement Policy
Email: Samantha.Oleary@ssa.gov
Email: Kevin.Whitman@ssa.gov
GAYLE REZNIK, U.S. Social Security Administration
Email: Gayle.Reznik@ssa.gov
DAVE SHOFFNER, U.S. Social Security Administration
Email: Dave.Shoffner@ssa.gov
Friday, May 20, 2011
Should we reduce COLAs? Or increase them? Maybe a bit of both…
I talk COLAs, over at AEI's online magazine, The American.
Saturday, May 14, 2011
What would FDR do to fix Social Security? Maybe not what many of today’s Democrats might think.
With the Social Security Trustees Report to be released today, the question of how to fix the program gains new visibility on the national radar screen. Sylvester Schieber, a noted expert on retirement policy and former head of the Social Security Advisory Board, asks “What would FDR do?” The answers, I thought provide some real insight. Writing for the Progressive Policy Institute, Syl begins:
"In recent months, Jack Lew, director of the White House Office of Management and Budget, and Senate Majority Leader Harry Reid have asserted that Social Security is not part of the federal budget problem. The federal government’s biggest program, they say, has ample resources to cover legislated benefits over the next 25 years. Therefore, lawmakers need be in no hurry to tackle Social Security’s long-term funding gap."
"As a long-time analyst of U.S. retirement policy, I believe these claims are fatally flawed. In fact, Social Security’s financing costs already are adding to the federal government’s overall debt burden. Moreover, the longer we wait to rebalance the program, the higher the economic and political costs of the adjustments that must be made."
"From a progressive perspective, I find it disconcerting that, instead of strengthening Social Security for future generations, leading Democrats are instead finding excuses not to deal with the system’s real but quite manageable fiscal gap. Having studied and written about Social Security’s history, I can’t help but compare such evasions with the rigorous sense of fiscal responsibility and intergenerational justice shown by the system’s creator, Franklin D. Roosevelt."
Schieber then illustrates how Roosevelt might have felt about our current situation:
"In the early 1930s, Roosevelt openly criticized and opposed two popular national retirement plan proposals because they included financing that would create significant future liabilities for taxpayers and the federal government. In early 1935, as FDR reviewed the initial draft of the legislative package which established Social Security, he discovered the plan would result in projected cash deficits beyond 1960 and that the system would require outside funding beyond the payroll tax by 1980. He felt that it would be “dishonest” to set up a program that would create burdens for future congresses and presidential administrations to deal with, burdens that would limit their ability to manage the government’s fiscal operations or other obligations. He understood the fundamental truth of any publicly-financed, universal retirement system: the government’s costs ultimately would have to be borne by workers. FDR therefore demanded that his own administration’s Social Security proposal be altered so the program would be fully financed through the end of the projection period, then 1980, and be balanced at that time."
The whole article is really well worth checking out – very good stuff.
I myself asked what FDR would do, in the context of President Obama’s proposals to address Social Security, here. A common thread of both articles is how contexts have changed over time, even for those who see themselves as inheritors and protectors of FDR’s vision.
Read more!
Tuesday, May 3, 2011
Marty Feldstein on Social Security and personal accounts
Harvard Professor Martin Feldstein writes on Social Security reform and personal accounts over at the Wall Street Journal. Even Mr. Obama accepts the inevitability of lower future Social Security benefits. In his budget speech last month, he reiterated his State of the Union language indicating a willingness to negotiate lower future benefits. After noting that Social Security "faces real long–term challenges in a country that is growing older," he said that future changes must be made "without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; without subjecting Americans' guaranteed retirement income to the whims of the stock market." Those words, if read carefully, imply that Mr. Obama accepts reducing future Social Security benefits as long as current retirees and the "most" vulnerable are exempted and benefits are reduced gradually (not "slashed"). And while the Social Security taxes are not to be invested in the stock market, some form of universal add-on investment based account is clearly not precluded. This is not fundamentally different from plans developed by Presidents Bill Clinton and George W. Bush: exempt current retirees, reduce future benefits gradually, and supplement tax-financed Social Security with investment-based accounts. In short, while slowing the growth of Social Security is a necessary response to the changing age structure, it is possible to do it in a way that protects overall retirement incomes by creating universal supplemental personal retirement accounts that generate an annuity for retirees. Check it out here.
Monday, May 2, 2011
New NASI paper: “Should Social Security’s Cost-of-Living Adjustment Be Changed?”
The National Academy of Social Insurance has issued a new Fact Sheet titled "Should Social Security's Cost-of-Living Adjustment Be Changed?" by Benjamin W. Veghte, Virginia P. Reno, Thomas N. Bethell and Elisa A. Walker which looks at potential policies to reduce or increase annual Cost of Living Adjustments (COLAs) for Social Security benefits. Overall it's a pretty good review of the arguments given by both sides. Most economists agree that conventional CPI measures – like the CPI-W used to calculate Social Security COLAs – tend to overestimate true increases in the cost of living because they don't account for how individuals can shift between different items to account for changing prices (e.g., if apples increase in price we may buy more oranges; if chicken rises in price we may buy more beef, etc.). A version of the CPI that's designed to account for these changes – called the "Chain Weighted" CPI, or C-CPI – generally shows inflation around 0.3 percentage points lower than the CPI-W. On the other hand, neither the CPI-W nor the chained CPI account for the particular purchasing patterns of Social Security beneficiaries, which can differ from those of the working age individuals who are the base for the CPI. An experimental CPI for the elderly, called the CPI-E (E stands for "experimental," not elderly) generally shows inflation around 0.2 percentage points higher than the CPI-W. The main reason is that seniors spend more on health care and health costs have risen faster than other categories. However, the CPI-E shares the same overstatement of inflation that experts see in the CPI-W. So what to do?? The obvious answer – to me, at least – is to create a chain-weighted version of the CPI-E – that is, a C-CPI-E – that accurately accounts for the purchasing habits of seniors. As it happens, in a forthcoming Social Security reform proposal I'll be proposing exactly that. This new C-CPI-E would account for both the upward and downward biases of the CPI-W and would produce annual COLAs around 0.1 percentage point lower than those generated under current practices. This wouldn't make a huge dent in Social Security's deficit, but that's not the point. The point is to get COLAs right and this dual approach seems to get closer than either the current method or the two proposed alternatives. It's unfortunate that NASI's Fact Sheet seems to come down on the side of the CPI-E while more or less ignoring the overstatement of inflation that most experts see in that measure.
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