James Moore of the investment firm PIMCO discusses the latest Social Security Trustees Report. Some highlights:
- Over the past five years the exhaustion date of the OASI trust has been brought forward by eight years. We are heading in the wrong direction.
- What is causing the shortfall? Setting aside the actuarial p’s and q’s, the core of the problem comes down to mortality, demographics and growth.
- The most likely solution will be lower indexation of wage growth for benefit determination, delayed retirement for those set to retire in 10 or more years and higher taxes for everyone.
Check out the whole article here.
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2 comments:
Given his introduction you would think that he would touch on what has caused the projection of the shortfall to change (not just the cause of the shortfall), but he does not talk about the economic downturn. He may not be wrong, but he is misleading.
The most likely solution will be lower indexation of wage growth for benefit determination, delayed retirement for those set to retire in 10 or more years and higher taxes for everyone.
This solution has been used since 1940, push the burden onto current workers and future beneficiaries. It never worked in the past and there is no reason to think it will work any better in the future.
If there is a problem, why not cut current benefits now? What is so sacred that those who were first sacrifice nothing towards fixing the problem they perpetuated on today's workers?
As for SS-OASI getting worse over the past five years, the reason is pretty obvious. What we have is another talking head. Every year since 1983, "the year of the big fix" SS-OASI has gotten worse in real terms (larger future unfunded liabilities while lower present value Trust Fund to liabilities).
SS-OASI is a sinking ship. The workers know this, my kids know this, but for some reason politicians and seniors do not. People need to take their rose colored glasses off.
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