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15 Feb ’12
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Anyone get an updated SS statement recently? I got mine in last week. Not good.
The Social Security Administration projects that its trust funds will be depleted by 2033—not an optimistic forecast. But it may be even bleaker than that.
New studies from Harvard and Dartmouth researchers find that the SSA's actuarial forecasts have been consistently overstating the financial health of the program's trust funds since 2000.
"These biases are getting bigger and they are substantial," said Gary King, co-author of the studies and director of Harvard's Institute for Quantitative Social Science. "[Social Security] is going to be insolvent before everyone thinks."
The Social Security and Medicare Trustees' 2014 report to Congress last year found trust fund reserves for both its combined retirement and disability programs will grow until 2019. Program costs are projected to exceed income in 2020 and the trust funds will be depleted by 2033 if Congress doesn't act. Once the trust funds are drained, annual revenues from payroll tax would be projected to cover only three-quarters of scheduled Social Security benefits through 2088.
Researchers examined forecasts published in the annual trustees' reports from 1978, when the reports began to consistently disclose projected financial indicators, until 2013. Then, they compared the forecasts the agency made on such variables as mortality and labor force participation rates to the actual observed data. Forecasts from trustees reports from 1978 to 2000 were roughly unbiased, researchers found. In that time, the administration made overestimates and underestimates, but the forecast errors appeared to be random in their direction.
"After 2000, forecast errors became increasingly biased, and in the same direction. Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds," wrote the researchers, who include Dartmouth professor Samir Soneji and Harvard doctoral candidate Konstantin Kashin.
The administration's Office of the Chief Actuary produces the forecasts. Stephen Goss, the chief actuary since 2001, was unavailable to comment and has not seen all of the new research, an administration spokesman said.
4 Mar ’12
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if it fails, do I get all the money back that i put in?
thats what i thought
19 Feb ’12
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At least we have affordable, universal health care . . .wait . . .
15 Feb ’12
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that created a huge discussion at the last town meeting
15 Feb ’12
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No matter who wins the White House in 2016, there's no getting around it: Social Security benefits will be cut starting in 2017. A 1983 pact between President Reagan and the Democrat-led Congress to stave off an imminent Social Security financing crisis included a hike in the official retirement age from 65 to 67 somewhere in the far-off future.
But that pact is pushing the limits of age-related reforms , even as a new funding crisis builds for the retirement program.
The retirement age rose to 66 in two-month increments between 2000 and 2005. Between 2017 and 2022, the retirement age will rise to 67.
In practical terms, workers claiming benefits at age 62 in 2022 and beyond will face a 30% reduction in the annual benefit that they receive throughout their lives. When the retirement age was 65, those claiming benefits at 62 suffered a 20% cut.
The cuts are intended to be an actuarially fair trade-off allowing people to get a benefit that's smaller but runs for more years.
While it may be fair, that doesn't mean it won't hurt. If that 30% cut were in place today, it would shrink the available benefit for a $30,000-earner turning 62 down to the poverty level, a bit less than $12,000 a year. That's hardly enough to ensure income security for members of the working class who live long enough to deplete their savings.
In Trust Fund We Bust
Yet despite the coming rise in the retirement age, Social Security's cash deficit is set to explode to $361 billion in 2025 from $74 billion in 2014, the Congressional Budget Office estimates. The CBO's estimates point to the $2.8 trillion trust fund being depleted late in 2029, after which program revenues will cover only about 75% of scheduled benefits.
Something has to be done to put the program on a firmer footing, and potential Republican candidates have begun stepping forward with their ideas. Chris Christie and Jeb Bush have both put themselves squarely behind a further increase in the retirement age. Christie specifically advocated a hike to age 69, closing a bit more than one-third of the financing shortfall.
But a hike to age 69 would mean that early retirees would have a whopping 39% benefit cut for life. To avoid that scenario, Christie proposed raising the earliest eligibility age for claiming benefits to 64, in tandem with the retirement-age increase.
Read More At Investor's Business Daily: http://news.investor.....z3aPHljadG
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