New paper: “Social Security’s Financial Outlook: The 2019 Update in Perspective”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Social Security’s Financial Outlook: The 2019 Update in Perspective”

by Alicia H. Munnell

The brief's key findings are:

• Contrary to media reports, the 2019 Trustees Report shows little change overall:
  • Social Security’s 75-year deficit ticked down from 2.84 percent to 2.78 percent of payroll.
  • Trust fund exhaustion moved out by one year, to 2035, after which payroll taxes still cover about three quarters of promised benefits.
• This shortfall is manageable, but action should be taken soon to equitably share the burden among cohorts, restore public confidence, and give people time to adjust.
• The Report did include one noteworthy change: a big improvement in the financial outlook for the Disability Insurance program.

This brief is available here.

Read more!

New paper: “Do Benefit Cuts Encourage Public Employees to Leave?”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Do Benefit Cuts Encourage Public Employees to Leave?”

by Laura D. Quinby and Gal Wettstein

The brief’s key findings are:

• Financially troubled state and local pensions may need to cut benefits for current workers, but such cuts could also induce some workers to leave.
• To assess this human resource impact, the analysis looks at a 2005 reform in Rhode Island that reduced benefits for some current workers.
• The results show that the affected employees were significantly more likely to leave the government over the next four years.
• Although the direct cost of hiring new workers was relatively small, governments should consider how losing skilled workers affects the quality of public services.

This brief is available here.

Read more!

New paper: "The Implications of Social Security’s 'Missing Trust Fund'"

The Center for Retirement Research at Boston College has released a new Issue in Brief:

"The Implications of Social Security’s 'Missing Trust Fund'"

by Alicia H. Munnell, Wenliang Hou, and Geoffrey T. Sanzenbacher

The brief’s key findings are:

• As policymakers consider restoring balance to Social Security, understanding the reason for the shortfall is important.
• Specifically, the program’s “pay-as-you-go” approach, which dates back to the late 1930s, makes it expensive.
• Paying full benefits to Depression-era workers essentially gave away the trust fund that would have accumulated, along with the interest on those contributions.
• To make up for the missing interest, costs are higher than in a funded system.
• Little rationale, however, exists for burdening today’s workers for the long-ago decision of allowing Depression-era workers to retire with dignity.
• These additional costs could be funded more equitably through the income tax, rather than the payroll tax.

This brief is available here.

Read more!

New paper: “Women, Marriage, and the National Retirement Risk Index”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Women, Marriage, and the National Retirement Risk Index”
by Alicia H. Munnell, Wenliang Hou, and Geoffrey T. Sanzenbacher

The brief's key findings are:

• Women are spending a growing share of their lives single, so it is useful to consider how their marital history affects their retirement preparedness.
• While married women have much higher household earnings and wealth, they are more at risk of failing to maintain their standard of living in retirement.
• This surprising result is driven by two-earner couples who:
  • get less from Social Security relative to their earnings due to the decline of the spousal benefit; and
  • save less in 401(k)s since often only one spouse has coverage.
• These findings highlight the need for expanding coverage to all households and underscore the value of Social Security to single women.

This brief is available here.

Read more!

Four Lessons from the Latest Social Security Trustees’ Report

Courtesy of Chuck Blahous, writing at e21.

1. Social Security faces a huge financing shortfall.
2. The shortfall is certain.
3. We are running out of time to save Social Security, if we haven’t already.
4. We need public trustees.

Check out the whole article here.

Read more!

Coming up! Saving and Retirement Forum with Peter Brady. “Using Form 1099-R Detailed Codes to Better Understand Income from Retirement Plans”

Join us in June!

For a Lunch Meeting with Guest Speaker:

Peter Brady

Senior Economist at Investment Company Institute

Who will discuss his new paper:

Using Form 1099-R Detailed Codes to Better Understand Income from Retirement Plans

Tuesday,
June 11, 2019
Noon-1:00 p.m.

Location:
- The Tax Foundation -
1325 G St NW
Suite 950
Washington, DC
(Lunch will be provided)

RSVP to depinto.patrick@gmail.com

Peter J. Brady, is a Senior Economist in the Retirement and Investor Research Division at the Investment Company Institute (ICI). At the Institute, Mr. Brady focuses on pensions, retirement savings, and the taxation of capital income.  Prior to joining the Institute, Mr. Brady worked as a financial economist in the Office of Tax Analysis at the U.S. Department of Treasury and, prior to working at the Treasury Department, as a staff economist in the Research Division at the Federal Reserve Board. Mr. Brady is a graduate of St. Lawrence University and holds a Ph.D. in economics from the University of Wisconsin.

Read more!

Conference Call The Financial Future of Social Security: Highlights from the Trustees' 2019 Reports

Conference Call
The Financial Future of Social Security: Highlights from the
Trustees' 2019 Reports

Tuesday, April 23, 2019
3:00 p.m. - 4:00 p.m.

Dial-in information provided upon registration

Stephen Goss | Chief Actuary, Social Security Administration
Charles Blahous | J. Fish and Lillian F. Smith Chair and Senior Research Strategist, Mercatus Center, George Mason University; Former Public Trustee of the Social Security and Medicare Trust Funds
Robert Reischauer | Distinguished Institute Fellow and President Emeritus, Urban Institute; Former Public Trustee of the Social Security and Medicare Trust Funds

Moderated by:
Marc Goldwein | Senior Vice President and Senior Policy Director, Committee for a Responsible Federal Budget
Kathleen Romig | Senior Policy Analyst, Center on Budget and Policy Priorities

Next week, the Boards of Trustees for the Social Security Trust Funds will release their annual report on the financial challenges facing the two program. This report is a critical benchmarks for policymakers and the public to understand the state of the trust funds. Their financial futures are critical to the millions of people who pay billions in taxes into the funds and use Social Security as the foundation for a secure retirement.

The Funding Our Future campaign invites you to join us for this call as we host the chief actuary for Social Security and the former public trustees for Social Security and Medicare to discuss key takeaways from the 2019 Social Security and Medicare trustees’ reports.

Read more!