4
Actuaries lay out Social Security fix
Social Security cards
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Renita Jablonski: Back to this side of the pond, talk of Social Security reform dropped off the radar months ago. But the American Academy of Actuaries says we've got to jump-start that discussion as soon as possible. The group is laying out options today to fix the problem. Danielle Karson reports.
Danielle Karson: Right now, the Social Security System's picture is rosy. Martin Bernstein is a consultant to the National Commission on Social Security.
Martin Bernstein: People have heard such scare stories about Social Security, that they believe that it is going bankrupt. Well, it's building a surplus.
Bernstein is right. The program is showing a $200 billion surplus. But in about seven years, Bruce Schobel at the American Academy of Actuaries says, that cash flow will start turning red.
Bruce Schobel: As the baby boomers retire in larger and larger numbers, Social Security's outgo is going to grow much faster than its income will, because the income depends on the number of workers.
Not only will retirees outnumber workers, but people will live longer. So Schobel says raising the retirement age past 67 has to be part of any rescue plan, as unpopular as the idea might be.
Schobel: We think that it's a demographic solution to a demographic problem.
In Washington, I'm Danielle Karson for Marketplace.
One of the things that concerns me and that I don't hear anyone discussing is this: If most of the jobs we are creating are lower paying jobs, are the individual amounts being paid into the system going to be smaller. Smaller amounts in -- larger amounts out. You do the math.
The perspective on this is totally wrong. The surplus has been built in accordance with the dictates of Alan Greenspan's Commission (formed under that liberal Ronald Reagan) precisely for the purpose of taking care of the Baby Boom generation. That generation will end, too, with the last Boomers retiring in about 2032. Meanwhile, because the projections have consistently been too pessimistic, year after year the "crisis" is about as far into the future as it was 10-15 years ago. When are national reporters with supposed expertise in economics going to even try to understand this?
In stories about Social Security (SS) they never tell you that millions of people that receive SS also pay a tax on those benefits. In fact for tax year 2008 I will give back to SS $3,112, which is more than I was paying into SS when I was working. Baby Boomers will be making more money in retirement and will be paying a bigger tax just because of inflation. Why doesn't someone write a story about that?
