Social Security is broke. It has an unfunded liability greater than the National Debt.
Economic
growth will not work because with economic growth comes two side affects.
Average wage increases, increase future Social Security benefits greater than inflation.
Economic growth has lower unemployment which means more people working, who most
likely will pay the minimum amount, for the minimum number of years, for the maximum
amount in benefits.
Rasing OASI rates to cover the shortage will end up shifting federal revenue from federal
income
taxes to Social Security revenues, creating budget deficits and increasing the National Debt.
Cutting future retiree benefits means this generation of workers will pay more in, get less out
and
make A Bad Deal absolutely
terrible. This is another tax hike on workers.
Increasing the age of retirement to 70, makes Social Security a lottery, at the same
time people
pay more years into the system and get less out. This is another tax hike on workers.
A Decreasing COLA helps, but it is a band aid. At 1.5% inflation, this number is not as large
a
player as it was with inflation at 7-10%. You just cannot get enough savings from this.
Furthermore, in 2050 the OASI deficit is greater than $1.3 Trillion and begins to grow rapidly.
The problem is just pushed out 50 years for another generation to fix the current problem.
Where do we stand
economically speaking? The current unfunded liability, of those 65 and over,
stands at $3,793,284,000 (~$3.8 Trillion). For those 55 and over the unfunded liability grows to
$6,474,810,764,000 (~$6.5 Trillion). To make the program last at least till 2100 and funded with
a 10.4% OASI rate (rate needed to fully fund SS benefit based on current formula and wage
growth paid in for 42 years) will take a deposit into the OASI fund of $10,696,372,188,000
(~10.7 Trillion) at the end of this year. Therefore, economically speaking, there are not enough
funds in the United States to fully fund the Old Age Survivors Insurance program. To make
things even worse, this analysis uses the same low inflation rate of 1.5% as Social Security does.
If inflation goes up at all between now and 2050, the unfunded value of those 55 and over goes
up considerably as well as for the rest of us.
However, there is a plan by which Social Security can be privatized without putting the
burden on
anyone generation.
Reduce current benefits to all retirees by 70% starting in 1999.
Reduce the OASI rate to 2.28% from 10.4% starting in 1999.
Anyone younger than 45 does not get Social Security. Thank you for your
contributions.
Those between the age's 46 and 62 will get reduced benefits based on 30% of the current
benefit formula.
Starting in 2013, the OASI rate will be reduced by .058% a year until 2052. It will then be
0%
of the base.
The OASI fund Balance in 2052 will be a deficit of $1,659,350,000 (~$1.7 Billion)
OASI will begin slowly redeeming United States Treasury notes ($662,935,718,000
Projected
at the end of 1998 ~$663 Billion)
Change the Federal tax code and make the Standard deduction the same for all tax payers
regardless of age. This means eliminating the higher standard deduction for those over 65. If
your income is not large enough to pay taxes, you will not be affected.
Eliminate the extra personal exemption for being 65 and over from the tax code. Again if
your
income is not large enough to pay taxes, you will not be affected.
Medicare is an entirely separate problem in worse shape than the
OASI program. It is not
discussed here.
Eliminate taxation of Social Security Benefits for those who have not received 100% of their
contributions. Subject all benefits to current tax levels after 100% of contributions have been
received. For those retiring in five to ten years, you will never recoup your contributions,
therefore, you will not pay any income tax on benefits.
Eliminate the earnings penalty on retirees who work and earn above the threshold.
In summary, the current retirees who paid little into Social Security, help pay to fix it.
Those
who are put into poverty can do a couple of things.
Reverse Mortgage homes.
Apply for welfare (better to pay reduce welfare benefits to a few than overpayments to
all seniors).
Current workers over 45 can begin saving 8.12% of their pay. This will allow them to
accrue
on average up to ~$50,000 without interest. They will still get 30% of projected the benefit,
which is about 10-15% of the last year's wage. Working a bit longer will help.
Current workers under 46 will have paid into the system for more than 25 years and not get
a
dime. This group may actually pay the greatest price. However, this group can only expect to
get at most 58% of their current projected Social Security Benefit. By being able to save a
minimum of 8.12% of their wage for 13 or more years, they should have enough to survive on.
In any event it will be equal to or greater than what Social Security would be able to pay.
There is a good possibility the next generation (children today)
would not vote to keep
Social Security and just eliminate it out right.
The young who have not begun to work will have to clean up the mountain of debt currently
at
$5.5 Trillion left by earlier generations.
As one can see, every generation pays a significant price for cleaning up Social Security and
the
failure of congress to address the issue in the 70's. It cannot be done by one generation alone.
However, if left to fester too long, it might be resolved by one generation who will out number
even the baby boomers. They may decide enough is enough and just vote in their own
representatives and eliminate it out right. Right now the Senior lobby is strong (41 million).
However, the group between 18 and 45 number 114 million. Even the group between 46 and 62
number just about 47 million. Still, this is not enough to out vote a determined 18 to 45 age
group.
I have watched since 1973 with great interest the Social Security debate. I have seen where
just a
few articles were printed in a year to numerous articles per day. With the Internet and the PC
people can deduce and check politicians' numbers. The time is now.
Think about it! Do we fix it now or let it fester another few years as we have since 1976?
If Social Security continues along with same level
of government services, what are the individual
projected tax burdens (OASI, DI, Medicare,
Federal Income Tax)
