tag:blogger.com,1999:blog-7334408760351487944.post7504543965183054837..comments2023-11-12T06:43:00.060-05:00Comments on Notes on Social Security Reform: Have Social Security benefits really been cut by 19 percent?Andrew G. Biggshttp://www.blogger.com/profile/16617460431856611873noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7334408760351487944.post-81107719394003131612011-06-09T12:28:13.473-04:002011-06-09T12:28:13.473-04:00"Because Social Security benefits are indexed..."Because Social Security benefits are indexed to wage growth, they increase faster than inflation, meaning that the typical retirement benefit in 2023, even after these cuts, would be around 30 percent higher than in 1983. You'd much rather get the real benefit levels that Social Security will pay in the future than it did in the 1980s."<br /><br />You are correct in this. I would like to point out that had wage indexing not been implemented in 1977, the initial benefit we all would be looking at could very likely be a standard of living based on the basket of goods available in 1977.<br /><br />Wage indexing versus inflation means that all cohorts begin with an initial SS-OASI benefit that is equivalent with life time wages versus a benefit that is stagnant or fixed in time. The only problem with this discussion is that SS-OASI can pay but 76% of promised benefits under current law. Current law states that COLA will cease when the SS-OASI trust fund falls to 20% of any given year's projected expenses.<br /><br />So what is the equivalent cost of no COLA? At 2% inflation the equivalent up front cut to SS-OASI benefits is 16% to 19% depending on how long you live. Based on life tables at age 67 it is 18.5%. In other words, SS-OASI is able to pay 58% of promised benefits with COLA.<br /><br />So I ask the question once again. Who are we attempting to save social security for; ourselves or our children/grandchildren?WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.com