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The coming Social Security disaster will make the savings and loan fiasco look like child's play...When today's 20-year-olds retire, they will receive pensions 50 percent less than those of today's Social Security recipients."

That's the opinion of researcher Walter Williams at George Mason University. It's also the opinion of many other researchers.


The highly successful system in Chile can be a model for U.S. Social Security reform, says Hardy. In l924 Chili was the first country in the Western Hemisphere to adopt a Social Security system. In l98l Chile was facing the same problems we now face and changed its system.


RAISE THE RETIREMENT AGE. This could solve about half of Social Security's financial problem. Hardy recommends gradually increasing the age for full benefits to 70. No one presently over age 5l should be affected.


In l950 there were l6 workers for every Social Security beneficiary. Today there are 3.3. By 2030 there will be 2.


The average American spends l8 years in retirement. He recovers what he paid into Social Security in eight years.


A recent national survey conducted by Matthew Greenwald and Associates says many Americans would accept raising the retirement age somewhat. They would also accept some tax increases to keep Social Security solvent. But they think most tax increases or other changes to keep the system solvent should be aimed at high-income people.


But Money magazine writers, AARP director Horace Deets and several other analysts say this is a bad idea. Deets says turning part of Social Security into an individual investment program would require more financial expertise than most people have. It would also take the security out of Social Security because investments, especially in the stock market, could be risky, says Deets.

There are no guarantees on Wall Street, says Social Security district manager Charles Detmer. What happens if the average worker does not do well in his investments? What does he do for a retirement income? Money magazine says middle-income workers would have only small amounts to invest, which would require them to pay higher brokers' fees and other costs big investors can avoid. Middle-income workers could end up earning far less than assumed.

Other officials point out that Social Security does much more than just pay retirement benefits. It protects wives and children when a breadwinner dies. It protects families against disabilities. It is an insurance system for society as a whole in many ways. Even though benefits may be small, they keep many Americans from facing financial ruin. Changing any part of that to a system involving uncertainties and risks would be a mistake, they say.


People also are retiring earlier. More than half of American retirees begin collecting Social Security before age 65. The average age used to be 68 for beginning benefits. Now it's 63.


The age at which Americans can collect full Social Security benefits has increased to 66 (from 65) for those born from l942 through l959, and to 67 for those born after l960. That change was passed several years ago.


The top 20 percent of Americans have 49 percent of the income. In terms of wealth accumulation, the top 20 percent have 68 percent of the net worth. And take out home ownership, which is the best example of everybody having a chance to be cut into ownership--61 million Americans own their own homes at an average value of $110,000--and the top 20 percent have close to 90 percent of the financial assets. That's fundamentally wrong.


Let's face it, if Social Security goes under, everyone on this panel will survive. We have other methods of paying for retirement.


The demographic makeup of America is changing. The share of the population over the age of 65 will continue to grow well into the next century. Today, approximately 13 percent of the population of the United States is over age 65.[15] By 2030 that percentage will increase to more than 20 percent. As a reference point, in 1991, 18.4 percent of the population of Florida was over the age of 65. In 2030 the entire United States will have a demographic profile similar to that of Florida today. Even more surprising, in less than 50 years, there will be as many Americans aged 80 and older as there are now people over 65.[16]

Exacerbating the situation caused by an increasing number of retiring Americans is the fact that we are now living a great deal longer than did our grandparents. The framers of the Social Security system designed it with contemporary life spans in mind. When they created the program in 1935 and chose 65 as the benchmark retirement age, the average life expectancy of a child born in that year was only 61. Today, the average life expectancy is 76 years, and by 2030 it is expected to approach 80 years of age.


Life Expectancy by Year of Birth

[Bar graph omitted. Data presented in tabular form.]

1935 - 61.4

1965 - 70.3

1995 - 75.8

2025 - 78.4


15. U.S. Department of Commerce, Bureau of the Census, Population Projections of the United States, by Age, Sex, Race and Hispanic Origin, 1993-2050, Current Population Reports P25-1104 (Washington: Government Printing Office, 1993), Table 2.




by Mark Weinberger


Social Security Reform: The Progressive Case


Anyway, the thing I found interesting was an attempt to actually address the

point, he said that raising the retirement age 5 years would cause 20M [?]

young people to be without jobs and that would be even worse than paying the

extra benefits. If he believes that, we should lower the retirement age to

60, or 30 for that


In November 1995, a poll conducted by the Charlotte, North Carolina-based polling firm GrassRoots Research, found even stronger doubts about Social Security's future. When asked what changes, if any, the respondents would make to Social Security, only 24 percent would leave the program alone; nearly as many (22 percent) would make Social Security completely voluntary; another 29 percent would either raise the retirement age or cut cost-of-living increases for current retirees.


If such a program were completed by 2025, there would be 10%-15% fewer beneficiaries at that time. In addition to the reduction in pay-offs, there are other benefits:

·        shorter payout periods

·        longer work careers will tend to increase the national productivity (but not per worker productivity)

·        longer work careers and shorter retirement periods will reduce the costs of funding pensions (or increase the benefits available during retirement years)

·        assuming that Medicare eligibility rises with changes in the normal retirement age, it reduces the costs of Medicare (both part A and Part B)

·        when compared to reducing benefits, this approach reduces the risks of "running out of" retirement funding by allowing greater social security benefits at a given level of expenditures during the latter years

There are no proposals that don't have some drawbacks. For this one, the disadvantages are:

·        it extends the period during which benefits are not available which can be especially burdensome on those laid off during the later years when obtaining a job becomes more difficult (age discrimination laws notwithstanding)

·        it increases the per-employee costs of employer-provided medical insurance as a result of an older employee population.

·        there are those individuals who, because of occupation and/or physical condition are unable to work to age 70. One would expect that there would be some increase in DI enrollment that would offset some of the anticipated savings in OASI.

·        because initial benefits are based on average salary and number of quarters worked, extending the work life of the individual will raise the annual OASI benefits payable to the worker and spouse/survivor.


            At Birth                       At AGE 65                 

Year    Male   Femal Male   Female           

1940    61.4     65.7     11.9     13.4    

1945    62.9     68.4     12.6     14.4    

1950    65.6     71.1     12.8     15.1    

1955    66.7     72.8     13.1     15.6    

1960    66.7     73.2     12.9     15.9    

1965    66.8     73.8     12.9     16.3    

1970    67.1     74.9     13.1     17.1    

1975    68.7     76.6     13.7     18.0    

1980    69.9     77.5     14.0     18.4    

1985    71.1     78.2     14.4     18.6    

1990    71.8     78.8     15.0     19.0    

1995    72.2     79.1     15.3     19.1    

2000    72.9     79.7     15.5     19.3    

2005    73.7     80.1     15.8     19.5    

2010    74.3     80.5     16.0     19.6    

2015    74.6     80.8     16.2     19.8    

2020    74.9     81.1     16.4     20.1    

2025    75.2     81.4     16.6     20.3    

2030    75.5     81.7     16.8     20.5    

2035    75.8     82.0     17.0     20.7    

2040    76.1     82.2     17.2     20.1    

2045    76.4     82.5     17.4     21.1    

2050    76.7     82.8     17.6     21.4    

2055    77.0     83.1     17.8     21.6    

2060    77.2     83.3     18.0     21.8    

2065    77.5     83.6     18.1     22.0    

2070    77.7     83.8     18.3     22.2    


1995 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, April 3, 1995, U.S. Government Printing Office, Washington, DC, 1995

All numbers are from the intermediate projections series. Table IID2, pg 62 (Intermediate Serries. ©Copyright 1995, Michael Rosenberg



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