Friday, September 20, 2019

New paper: “Promoting Economic Growth through Social Security Reform”

From Marc Goldwein, Maya MacGuineas and Chris Towner of the Committee for a Responsible Federal Budget.

Here’s the summary, but you can read the full paper here.

Summary of Recommendations for Pro-Growth Social Security Reform

Recommendation #1: Increase the Retirement Ages while Insulating Vulnerable Workers with an Age 62 Poverty Protection Benefit (62-PPB). One way to increase the size of the economy is to promote work among older Americans. Workers today face mixed retirement signals that often draw them into early retirement and treat retirement itself as a binary choice. To encourage longer and more flexible working lives, we propose phasing in an increase to Social Security’s early and normal retirement ages and then indexing them to growth in life expectancy. Understanding that many workers are unable to continue to work, we also propose offering all workers a 62-PPB benefit designed to insulate low-income workers from the financial effects of the age increases and ensure that anyone can retire at 62 without slipping into poverty.

Recommendation #2: Calculate Benefits Based on Each Year of Work Rather than Lifetime 35-Year Average Earnings. Higher labor force participation among workers of all ages can help to strengthen the economy. Yet the current Social  Security benefit formula imposes a significant implicit tax on those who work less than ten years and on workers later in their careers – especially after 35 years of work. To reward each year of work, we propose counting every year of earnings toward Social Security benefits and applying Social Security’s benefit formula to annual, rather than average, earnings through a formula known as “mini-PIA.”

Recommendation #3: Automatically Enroll Workers into a “Supplemental Retirement Account” (SRA) on top of Social Security, with the Choice to Opt Out. Increasing the national savings rate would boost overall investment, increasing capital stock and economic growth. Unfortunately, many workers lack access to retirement savings vehicles, or are saving too little for retirement. To increase savings and investment, we recommend enrolling workers into add-on SRAs and automatically contributing 2 to 3 percent of their wages unless a worker chooses to discontinue contributions. SRAs could be invested into one of several well-diversified, low-fee funds and would be owned by the worker, who could access the funds upon retirement.

Recommendation #4: Make Social Security Sustainably Solvent Through a Combination of Progressive Tax and Benefit Changes. Reducing federal borrowing can promote economic growth by reducing “crowd out” of private investment, while improving policy certainty can significantly improve saving and investment choices. Unfortunately, Social Security is running large and rising deficits, which increase federal debt and leave the program on course to exhaust its trust fund reserves by 2035. To make the program sustainably solvent, we suggest a package of progressive revenue and benefit adjustments that would protect low-income seniors, phase in gradually, and ultimately bring the program’s costs and revenues in line. We also suggest that the precise composition of this package be decided as part of a political negotiation.

We also suggest lawmakers consider other pro-growth reforms – as part of and to supplement Social Security reform – in order to maximize potential growth effects.

Read more!

Tuesday, September 17, 2019

Social Security Advisory Board announces meeting to review the 2019 Technical Panel final report

On Friday, September 27th the Social Security Advisory Board ("Board") will host a public meeting to review the 2019 Technical Panel on Assumptions and Methods' ("Technical Panel") report to the Board. The Board convened the independent, expert panel to review the assumptions and methods used to develop the annual report of the Social Security Trustees on the financial status of the Old-Age, Survivors, and Disability Insurance trust funds. The 2019 Technical Panel is the sixth quadrennial panel the Board has commissioned since 1999.

The 2019 Technical Panel is comprised of experts in the fields of demography, economics and actuarial science. The report reflects solely the views of the Technical Panel. The Board convened the Technical Panel, as well as past panels, in the hope that the work provides an important service to the public—an outside and expert review of the methods used to project Social Security financing.

The meeting will be held from 10:30 AM – 12:30 PM in Room 215, Dirksen Senate Office Building at 50 Constitution Avenue NE, Washington, DC 20002. Please email to RSVP if you plan to attend. The report will be available in electronic format only and will be posted on the Board’s website at least 48 hours in advance of the meeting.

Read the full announcement

Read more!

Monday, September 16, 2019

Savings and Retirement Foundation with Guest Sandy Mackenzie

Savings and Retirement Foundation

For a Lunch Meeting with Guest Speaker:

Sandy Mackenzie,

Founding editor

Journal of Retirement

September 24th, 2019

Noon-1:00 p.m.


The Tax Foundation

1325 G Street NW

Washington DC 

Sandy Mackenzie is the founding editor of the Journal of Retirement and an experienced economic consultant and editor with a demonstrated history of working in non-profits, editorial supervision and economic policy, with an emphasis on fiscal policy. He has substantial experience with nonprofit organizations and skilled in the economics and finances of retirement, lecturing on fiscal, monetary and retirement issues, writing, and policy analysis. He holds a Master of Philosophy  in Economics from Oxford University.

Read more!

Thursday, September 12, 2019

CBO’s 2019 Long-Term Projections for Social Security: Additional Information

In lieu of publishing a separate report providing additional information about CBO’s long-term projections for Social Security, the agency is publishing the data that it would have presented in that report.

View Document

Read more!