- Who We Are
- Speak Up!
- Take Action
My proposed solution will be submitted tomorrow.
Under current law, the Social Security program remains an unsustainable social service and must undergo reforms if it is to remain solvent indefinitely.
In 2012, over 158 million people paid into the program and over 55 million received benefits, almost three workers per beneficiary.
If no reform is made to current law, the following will occur:
-Payroll taxes will only cover about 75% of the scheduled expenses from 2033-2086
-Between 2022 and 2033, the Trust Fund balance will be redeemed to pay retirees, and will draw about $3 trillion in government funds from sources other than payroll taxes
The tax increases and/or benefit cuts required to maintain the present system will only increase the longer reform is delayed. To illustrate this necessity, consider the following: f the Payroll Tax rate were raised to 15% (instead of 12.4%), or benefits were cut by 16.2%, all Social Security budget issues would be resolved. However, if no changes are made, those amounts would increase to 16.7%/25% respectively in 2033. It is imperative that Social Security reform cease to be a political death-trap become a top federal policy priority.
At the end of 2011, the Social Security Trust Fund was valued at $2.7 trillion, effectively funding itself with a surplus of $2.7 trillion. However, starting in 2011 and onward, program expenses are projected to exceed revenues, due to the impending retirement of the Baby-Boom generation, continued low birth rates, and increasing life expectancy.
Research: Social Security Administration (link: www.ssa.gov)
Designer: James Egnor-Keil (james [dot] ryan [dot] ekgmail [dot] com)
So much for an early (-ish) bedtime. The fiancee writes lesson plans, I write policy proposals. Such is life.
The concept for my reform proposal is centered around one objective: adapt the Social Security system to reflect modern realities, namely the increased life expectancy in the United States and the cost of living.
Part One-Raise the retirement age gradually, raising full-benefit eligibility from 67 to 70.
Life expectancy (since birth; this is important to note, as adult life expectancy is a different measure) in the U.S. has been increasing since the 1940's (around the time that the Social Security program was established), and presently stands at 78 years of age, a 16 year increase from the program's conception. The age of eligibility in the 1940's was 65, and now sits at 67 for full benefits. If the average American life expectancy has increased by 15 years, with the retirement age increasing by 2 years, it becomes clear that an adjustment can be reasonably made. A 3 year increase for full benefits should fall within this scope.
This is anticipated to fund half of the 75-year shortfall.
Part Two-Restrict the program's Cost of Living Adjustment (COLA) from the current Consumer Price Index for urban wage earners and clerical workers (CPI-W) to the “Chained CPI”, which is a better measure of inflation and a much more reasonable method of calculating the COLA. According to a poll of top economists by the Initiative on Global Markets, the indexing of Social Security benefits to increases in the CPI-W ends up leading to higher benefits than would be required to compensate recipients for actual cost of living increases.
Starting in January 2013, Social Security beneficiaries are receiving a 1.7% COLA. If the model was changed from the CPI-W standard to the Chained CPI, the COLA would be 1.5%, a 0.2 percentage point decrease, which translates to about two dollars less per month.
If the COLA was adapted to the Chained CPI model, it would create only a minor change to Social Security benefits that would only slow their growth, not cut them. A 0.2 percentage point change in benefits would account for about a quarter of the projected 75-year shortfall.
These, combined with a very slight increase of either the Payroll Tax or the payroll wage base, will resolve all Social Security budget issues over the next 75 years. It is by no means an indefinite “cure”, but I believe it is a good start to controlling expenditures.
Simple numerical adjustments, however, will not quite solve all of the issues the Social Security program faces. Investing wisely is one of the most important things a person can do to make a positive impact on their future. As such, I propose the implementation of programs that educate future retirees about retirement decisions and their impacts, with added emphasis on the idea of delaying retirement in order to receive more benefits, and about the importance of setting aside private retirement savings responsibly. I have the privilege of holding a Roth IRA, which will make me a pre-tax millionaire should I retire at a reasonable age, and I believe that others should be made aware of private investment possibilities.
Primary: S0cial Security Administration (link: www.ssa.gov)
Secondary: A survey conducted by the Initiative on Global Markets (link: http://www.igmchicago.org/igm-economic-experts-panel/poll-results?Survey...)
Do you have stocks in your IRA? If so what involvement do you have in the companies that you have shares in? Are you letting software make buy low and sell high descissions? Are you personnaly holding coorperations that you own shares in responcilble and accountable for jobs in the US? If not, then are you going to ride the train untill it crashes or are you going to jump off, and let everyone else on the train get in a wreck?
My IRA is a mutual fund. at present I have neither the time not the stomach to manage a responsible portfolio.
There will be more posting soon. I'm out on the town at present and will give a perhaps more satisfying response later.
Alright, to round it all out:
Again, my IRA is a mutual fund, which yields modest growth year after year, and as far as I know, it has been relatively safe.
I place emphasis on "as far as I know", since management of those funds falls to my agent, who invests it as he sees as beneficial. I cannot honestly tell you where my money is going. Perhaps I should hold my agent accountable?
JR, that was spam no doubt.
BTW, I know as many folks on SS DI as on SS almost, how are the disability claims paid? From the general pool? ALso SS DI has a different standard than the average over ten years standrd of setting one's normal retirement SS payout.
DI maybe a center of extremely perverse economics, imho.