Friday, September 26, 2014

Smith: “Does Social Security Impact the Federal Deficit?”

Brenton Smith, writing for, hits on a point that others have missed in the question of how Social Security affects the overall budget deficit:

Social Security is not self-supporting as [Oregon Sen. Jeff Merkley] claims.  It receives by law (Public Law 98-21) annual general fund transfers, mainly the revenue from the taxation of Social Security benefits. This revenue appears on-budget, and is dollar for dollar deficit spending. Over the past three years, Social Security has by law created more than $75 billion of “On Budget” deficit – according to the Trustees.

As I’ve written for Real Clear Markets, I think the Social Security/budget deficit issue is broader than this: when we consider the “unified budget deficit,” which is by far the most common figure used regarding the federal budget, a decline in Social Security’s funding health has basically a dollar-for-dollar impact on the deficit. So if, say, Social Security for some reason collected $10 billion less this year than anticipated then the unified budget deficit will rise by $10 billion. The intergovernmental transfers to and from the trust funds matter for Social Security’s solvency, but on a budget-wide basis those cancel each other out.

Read more!

Tuesday, September 23, 2014

New publication: “Using Your House for Income in Retirement”

The Center for Retirement Research at Boston College has released a new consumer guide: “Using Your House for Income in Retirement,” by Steven Sass, Alicia H. Munnell, and Andrew Eschtruth

The booklet’s key points are:

  • Home equity is the largest store of wealth for retirees and, with reduced support from Social Security and pensions, many more will need it for retirement income.
  • The two ways to tap home equity are downsizing and a reverse mortgage.
  • Downsizing:
    • Adds to your savings, which boosts income from savings.
    • Frees up more income by reducing taxes, insurance, and upkeep.
  • A Reverse Mortgage:
    • Allows you to stay in your home.
    • Provides income through a line of credit, lump sum, or monthly payments.
A PDF of this booklet is available here.
Hard copies are available for purchase. Read more!