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Showing posts with label SocialSecurity. Show all posts
Showing posts with label SocialSecurity. Show all posts
Social Security is $20.5 trillion in debt

Social Security is $20.5 trillion in debt

Larry Kotlikoff has this warning in Sunday's New York Post:
Social Security’s trustees say the system needs only “modest changes.” In fact, the system is desperately broke. The proof is buried deep in the trustees’ own 2012 report in a complex table, numbered IV.B6. Table IV.B6 is a long-run balance sheet for Social Security. It shows that the system’s $88.9 trillion in liabilities exceed its $68.4 trillion in assets by $20.5 trillion. The $20.5 trillion fiscal gap separating Social Security’s liabilities and assets — its unfunded liability — is enormous; it is 1.4 times US gross domestic product and 34 times annual Social Security taxes. Because $20.5 trillion is equal to 31% of the projected taxes, the system is 31 percent underfunded. To pay all promised benefits would require immediately and permanently raising Social Security’s 12.4 percent payroll tax (split evenly between employer and employee) by 31%, or 3.9 percentage points. . . .
Will President Obama think differently about his temporary cut in Social Security taxes? Temporary tax cuts aren't particularly beneficial, and it would be better to cut income tax rates, but for about half the population their federal income tax rate is already zero.
Canada raises retirement age to 67

Canada raises retirement age to 67

From the AFP:
Flaherty said old age security and guaranteed income supplement benefits worth up to a total of Can$15,000 and now paid out at age 65 would be offered only at age 67, starting in 2023. . . .
Impact of increasing retirement age on the size of the economy

Impact of increasing retirement age on the size of the economy

From the CBO blog:

Raising any of the ages of eligibility would cause some people to work longer, thereby increasing the size of the workforce and the economy. Although the magnitude of those effects is difficult to predict, CBO estimates that:

Raising Social Security’s early eligibility age to 64 or the full retirement age to 70 would, in the long term, boost the size of the workforce and the economy by slightly more than 1 percent.
Raising Medicare’s eligibility age to 67 would also boost the size of the workforce and the economy, but by a much smaller amount.
Only 1.75 Full-Time Private Sector Workers Per Social Security Recipient

Only 1.75 Full-Time Private Sector Workers Per Social Security Recipient

This is one side effect of so many people dropping out of the labor force. Anyone have an idea how high Social Security taxes have to be if there are only 1.75 private sector full-time workers paying taxes for every person getting benefits? The problem is that a lot more people are going to be retiring soon. This also provides some background for Obama's chosen method of cutting taxes. From CNSnews.com:

There were only 1.75 full-time private-sector workers in the United States last year for each person receiving benefits from Social Security, according to data from the Bureau of Labor Statistics and the Social Security board of trustees.

That means that for each husband and wife who worked full-time in the private sector last year there was a Social Security recipient somewhere in the country taking benefits from the federal government. . . .


Gov. Rick Perry might be on to something in calling Social Security a “Ponzi scheme.”
Is the Chilean Economic Miracle due to Social Security reform?

Is the Chilean Economic Miracle due to Social Security reform?

While the rest of the world is having to deal with large debt problems, privatizing its social security system has made the country much wealthier.

Pinera told the public to expect a compounded 4% rate of return under the private plan. But as of 2010, the average annual rate of return was 9.23%, far higher than promised.

By contrast, the U.S. social security system, which today accounts for a quarter of the U.S. government budget, is slated to give retiring workers in the next decade a 1% to 2% rate of return. And those entering the system today will see a negative return.

Chile's implicit pension debt fell to just 6% of GNP — compared with 100% in the U.S., 300% in France and 450% in Italy, leaving Chile with no net debt.

Better still, the accumulated savings in the pension funds fueled Chile's spectacular economic ascent, taking real incomes from about $4,000 per capita in the early 1980s to $15,000 today, and GDP to the 6% range most years for nearly 20 years. With that record, is it any surprise that Chile this year earned itself a membership card into the club of rich nations, the OECD? . . .
Deficit Commission wimps out on Social Security Reform

Deficit Commission wimps out on Social Security Reform

A one year increase in retirement age to occur in 2050 is simply not credible. Obama's appointed commission has to do something more to deal with the $110 trillion unfunded liability facing Social Security.

The co-chairmen of the panel appointed by President Obama to cut the U.S. deficit recommend raising the retirement age to 68. It is currently 67 years old for full benefits. The pane leaders also propose reducing the annual cost-of-living increases in Social Security.

Reuters reports that the increase to age 68 would be implemented by 2050 and then would increase again to 69 by 2075, according to a source who spoke on condition of anonymity to Reuters. A "hardship exception" would be provided for members if certain occupations where older retirement would be unrealistic, Reuters reported. . . .
Who is most likely to destroy Social Security and Medicare?

Who is most likely to destroy Social Security and Medicare?

Democrats cut $500 billion from Medicare and it is Republicans who are going to destroy it? With the huge deficits created by Democrats, that will be what threatens Social Security the most. If the deficits were still around $160 billion per year as they were the last year that the Republicans controlled both the Congress and the presidency, there would be much less of a threat to Social Security. I am hardly a fan of keeping Social Security or Medicare as they currently are, but it seems that the huge deficits that Democrats have created are what really endangers Social Security.
Incorrect promises about Social Security

Incorrect promises about Social Security

The notion advanced by the AP that the Social Security system won't have trouble paying Social Security recipients because it has IOUs from the Federal Government for $2.5 trillion is not serious. This isn't really money that has been put aside. The recipients will depend on the system cutting other spending or raising taxes or running up even larger debt (at least in the short run). The quote by Auerbach at least cautions people that the unemployment rate is higher than the official numbers indicate.

The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large. . . . .

"A lot of people who in better times would have continued working are opting to retire," said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. "If they were younger, we would call them unemployed." . . . .
Why you might not be using Social Security numbers on all the forms that you fill out much longer

Why you might not be using Social Security numbers on all the forms that you fill out much longer

MSNBC has this story:

There’s a new reason to worry about the security of your Social Security number. Turns out, they can be guessed with relative ease.

A group of researchers at Carnegie-Mellon University say they’ve discovered patterns in the issuance of numbers that make it relatively easy to deduce the personal information using publicly available information and some basic statistical analysis.

The research could have far-ranging implications for financial institutions and other firms that rely on Social Security numbers to ward off identity theft. It could also unleash a wave of criminal imitators who will try to duplicate the research.

Details of the research were published Monday in the Proceedings of the National Academy of Sciences journal and will be explained at the annual Black Hat computer hacker convention in Las Vegas later this month.

The report means companies and other agencies should once and for all stop using Social Security numbers as passwords or unique identifiers, said Professor Alessandro Acquisti, who authored the report.

"We keep living as if they are secure, a secret," he said. "They're not a secret." . . . . .
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