From Ed Lorenzen at the Committee for a Responsible Federal Budget.
1. Benefits will be cut by over 23% within the next twenty years if no changes are made.
2. Social Security benefits will increase in real terms for future retirees even with changes in benefits to restore solvency
3. The Social Security shortfall cannot be closed solely through increased taxes on upper income taxpayers.
4. Delaying action will make the options for restoring solvency more painful Not only does waiting to act mean any tax increases or benefit cuts will be steeper, it literally means they will need to be bigger.
5. The major Social Security plans that rely on a combination of benefit changes and increased revenues to restore solvency include targeted benefit enhancements for vulnerable populations at greatest risk of poverty.
But check out the whole discussion here.
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2 comments:
"1. Benefits will be cut by over 23% within the next twenty years if no changes are made.
2. Social Security benefits will increase in real terms for future retirees even with changes in benefits to restore solvency"
Let me get this straight. In 20 years there will be a 23% cut.
At 3% wage growth, the initial benefit in 20 years will be 73.5% larger than it is today. Inflation will knock a good 46% off of it. When inflation or buying power is accounted for the initial OASI benefit will have 20.3% more buying power.
Now subtract 23% from the future $1.203 in benefits and you will get 92.8 cents for each 1 dollar in buying power today.
But wait, that's not all folks. When the trust fund ratio to SS-OASI expenses reach 30% the COLA is reduced by 10% for each 1% reduction in the ratio until the ratio reaches 20% when COLA is eliminate.
I have no idea what credentials if any the person who wrote this article has, but they need to do some more research and bone up on their math.
PS you cannot subtract exponential equations linearly.
Andrew, I think you have choosen the wrong words.
Number 1 is not a fact. It is a likely outcome. The Trustees do not engage in predictions. They make assumptions, and tell you the results of those assumptions. But let's not confuse their assumptions with fact.
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