The Future of Social Security

[JMO]

From the SOA Blog Site
http://blog.soa.org/2011/11/08/susta...al-security-2/

Reform is necessary, not to help address the deficit issue, but to distribute the pain of some combination of increased taxes and reduced benefits more equitably to all tax-paying generations.

The blog also provides a helpful link to the SS government site and this report. http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

What I need is a Cliff Notes version that tells me what specific proposals have been made to address the problem.

Raising retirement age for future retirees? Changing the benefit formula in other ways? Switching back to a pure pay-go approach?

How would any of these suggestions (or the real ones on the table) result in a more equitable distribution?

ETA - or if they fail in that objective. Either way, some quantification might help.

[Duffer]

Sadly, our technical wizardry will not cause SS to improve funding.
There is no direct connection between funding federal elections and funding safety net benefits.
But there have already been plenty of solutions offered. Raise retirement age - yes. Modify cola - yes. Cap on credited earnings for benefit - yes. Forcing the Feds to pay higher interest on the trust fund gimmickry - yes. Raise taxes to return to pure pay-go - yes.

[Take 2]

Without major fixes, Medicare benefits will probably be partly funded by T-bills when the trust fund runs out in a few years. I suspect Social Security will follow a few years later. Romney seems the only politician willing to talk about remedies.

[campbell]

Well, I started this thread over a couple years ago....

http://www.actuarialoutpost.com/actu...d.php?t=165593

A few things from the Academy:
http://www.actuary.org/pdf/socialsec...ef_6-15-10.pdf

http://actuary.org/pdf/pension/IB_Au...ents_FINAL.pdf

[DeepPurple]

I have a question along these lines.

(for the record I am a P&C actuary, and I am just interested in the subject of OASDI from a taxpayer's perspective, not a practicioner, although I think that I have a better understanding of the system as a whole than John Q. Taxpayer)

I believe some sort of "needs testing" will eventually be a part of the reduction of aggregate benefits. In other words, the system's payouts will inevitably migrate from an "entitlement" to a wealth redistribution, transfer system.

The question is, when (not if) this comes in to effect, what will the means test look like? Will it be based on lifetime earnings or will it be based on a calculation of wealth or income at the time retirement benefits are sought?


I have a problem with the concept of reducing one's retirement benefit because he or she had the foresight to make personal savings a lifetime choice.

[campbell]

If you don't want to wallow through an almost-800-post thread, you can start here for some discussion
http://www.actuarialoutpost.com/actu...76#post5244976

[DanielSong39]

Past generations got much more from Social Security than they put in.

The current generation is getting much less from Social Security than past generations.

Future generations will get much less money from Social Security than they will put in.

So why can't people admit that the system is broken and actually make some big changes?

[Colymbosathon ecplecticos]

Maybe it isn't as bad a deal as you seem to think. Here is a post I made last year sometime:

Originally Posted by Colymbosathon ecplecticos

Ok.

It looks like you agree that we should pay some smallish stipend to the elderly to keep them from starving. Now there are several ways to so that, we could require that they request it based on need. The trouble is then we would need to figure out who is truly needy --- this would add large administrative costs and create a large opportunity for fraud. I have an idea, let's give the minimum benefit to everybody, that way we don't need to have means testing and fraud is less of an issue. Of course this will cost more than only giving the stipend to the needy, so it might not look like a good deal to the more wealthy, but that is only because they ignore the cost of not having the program. While we are at it, we should probably add some disability and survivor benefits since young people really need these and few can afford it. They will pay for the coverage later if they don't go on claim, something that private insurance simply cannot do. Presto, social security today.

[DanielSong39]

If Social Security was changed into a voluntary, direct contribution, 401K-like plan I would have zero complaints.

[Colymbosathon ecplecticos]

Would you be happy to pay the additional income tax needed to fund the safety net for seniors? Today the cost is carried by the system; presumably it would come from the general fund in your scheme.