Thursday, January 21, 2016

Social Security May Be at Risk of Cuts After the November Elections

Alicia Munnell writes for MarketWatch:
 Social Security may be at risk after the November elections...The stage is being set for benefit reductions. Cutting benefits would be a huge mistake, given that half the private sector workforce does not participate in an employer-sponsored retirement plan and that those lucky enough to participate in a 401(k) have combined 401(k)/IRA balances of $111,000 as they approach retirement. Therefore, it is very important to take a hard look at the emerging characterization of the Social Security program. 
Munnell is not just a columnist spouting off.  Every four years, Social Security establishes a Technical Panel to evaluate the Trustees’ projections.  In 2015, she chaired the Panel.

She writes that the 2015 panel suggested:
A more rapid mortality improvement, which means that people will live longer and receive more total Social Security benefits; lower fertility, which reduces the population at working ages relatively to the elderly population; and lower interest rates, which mean that revenues and benefits are discounted by a lower number. These cost-increasing changes raised the 2.68 percent deficit in the 2015 Trustees Report to 3.42 percent. 
The Congressional Budget Office has an even higher deficit number: 4.37%.

Bottom line: Social Security is getting deeper and deeper into the red. Once the elections are over cuts in benefits are a very real possibility.

Anyone counting on benefits based on current schedules is going to be in for a rude surprise.

-RW

4 comments:

  1. The "funds" are all Treasury bonds. The Fed will keep it afloat.

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  2. Social Security Railroad retirement and the Federal retirement programs were looted in the 1980's, since then they, government , have put in IUO's. Clinto did his thing with more printed money

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  3. Wait a min, so the political orientation most concerned with earth's population overload designed a scheme that requires a constant increase in the level of population to be sustainable?

    Also, isn't a there a name for a scheme that requires a constant level of increase in new buyers to pay out the old ones... patsy .... pastry ... potpourri.... PONZI!!

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  4. So why are illegal aliens getting social security even if they NEVER paid into it? Why aren't the just being deported? This is beyond outrageous.

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