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News Items, by Subject

Social Security - reform

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Underreporting of Self-Employed Income Affects Social Security and Medicare
"[M]ore than 3 million self-employed people -- construction contractors, small business owners, and other independent contractors -- did not disclose some or all of their earnings to the IRS in 2014. This under-reporting translated to unpaid self-employment taxes of $3.9 billion to Social Security and another $900 million to Medicare. An additional 2.3 million Americans sell goods and services on platforms like Airbnb, Lyft, and Etsy every month.... Their under-reporting resulted in an estimated non-payment of $2 billion to Social Security and $500 million to Medicare in 2014." (Squared Away Blog, by the Center for Retirement Research at Boston College)
[Opinion] Four Lessons from the Latest Social Security Trustees' Report
"[1] Social Security faces a huge financing shortfall.... [2] The shortfall is certain.... [3] We are running out of time to save Social Security, if we haven't already.... [4] We need public trustees." (Charles Blahous, Manhattan Institute for Policy Research)
[Opinion] Will Actuaries Miss the Boat Again on Social Security?
"Every year, the Social Security trustees release a new report discussing the financial status of the Social Security system and every year, the American Academy of Actuaries (AAA) releases their 'Actuarial Perspective' issue brief explaining the new report and the Academy's recommendations for possible system changes ... [T]he Academy should also recommend that Congress consider adopting automatic tax increases/benefit reductions on a going forward basis so that sustainable solvency can be maintained in the future without specific Congressional action." (Ken Steiner, FSA Retired)
The Implications of Social Security's 'Missing Trust Fund'
"Paying full benefits to Depression-era workers essentially gave away the trust fund that would have accumulated, along with the interest on those contributions. To make up for the missing interest, costs are higher than in a funded system. Little rationale, however, exists for burdening today's workers for the long-ago decision of allowing Depression-era workers to retire with dignity. These additional costs could be funded more equitably through the income tax, rather than the payroll tax." (Center for Retirement Research at Boston College)
An Actuarial Perspective on the 2019 Social Security Trustees Report (PDF)
10 pages. "In order to achieve viability of Social Security in the foreseeable future, any modifications to the system should include sustainable solvency as a primary goal. Sustainable solvency means that not only will the program be solvent for the next 75 years under the reform methods adopted, but also that the trust fund reserves at the end of the 75-year period will be stable or increasing as a percentage of the annual program cost.... Providing for solvency beyond the next 75 years will require changes to address micro-aging, as beneficiaries will likely be receiving benefits for ever-longer periods of retirement." (American Academy of Actuaries)
Highlights from the Social Security Trustees Annual Report
"[T]he Trustees Report includes a few suggestions on how to resolve this pending depletion of the Trust Funds.... If changes are made immediately, any one of the following permanent changes would make the OASDI Trust Fund solvent for the next 75 years. [1] The payroll tax ... would need to increase from 12.4%1 to 15.18%, an increase of 2.78%. [2] Benefits scheduled to be paid to all current and future beneficiaries would have to be reduced by 17%. [3] Benefits scheduled to be paid to anyone who becomes eligible for benefits in 2018 or later would have to be reduced by 21%.... If action is deferred until 2034, the year the OASDI Trust Fund is scheduled to be depleted, either of the following permanent changes would ensure solvency through the 75-year period: [1] Increase the payroll tax from 12.4% to 16.27%, an increase of 3.87%. [2] Reduce the amount paid to all beneficiaries by 23%." (Robert W. Baird & Co.)
Social Security: The Trust Funds (PDF)
21 pages. "The Social Security trust funds represent funds dedicated to pay current and future Social Security benefits. However, it is useful to view the trust funds in two ways: [1] as an internal federal accounting concept and [2] as the accumulated holdings of the Social Security program.... This report covers how the Social Security program is financed and how the Social Security trust funds work." [Report FL33028, updated May 8, 2019] (Congressional Research Service [CRS])
Social Security: The Trust Funds and Alternative Investments
25 pages. "Investing in marketable securities would signify a departure from the norms that govern the current investment practice. Investing in equities ... would demonstrate a similar departure from the trust funds' investment norms and would represent a government intervention into the private market. Some argue this expansion of investment options would be problematic because it dictates government ownership of, and possibly influence on, private companies.... [T]he historically higher returns on equity investment may motivate policymakers to enact changes to the OASDI Trust Funds' investment options and practices." [Report R45709, May 2, 2019] (Congressional Research Service [CRS])
An Overview of Social Security
"176 million covered workers (and their employers) pay into the system. 63 million beneficiaries receive monthly cash benefits, including retired workers, disabled workers, spouses, children, and widow(er)s. It is a self-financing program, with 91.7% of its total income from dedicated tax revenues. Over its 84-year history, the program has collected $21.9 trillion and paid out $19.0 trillion, leaving trust fund asset reserves of more than $2.9 trillion. It is projected to be unable to pay full benefits starting in 2035, largely due to demographic factors." [IF10426 version 11, updated May 1, 2019] (Congressional Research Service [CRS])
CBO Interactive Tool: How Changing Social Security Could Affect Beneficiaries and the System's Finances
"This interactive tool allows the user to explore seven policy options that could be used to improve the Social Security program's finances and delay the trust funds' exhaustion. Four options would reduce benefits, and three options would increase payroll taxes. The tool allows for any combination of those options. It also lets the user change implementation dates and choose whether to show scheduled or payable benefits.... The tool also shows the impact of the options on different groups of people." (Congressional Budget Office [CBO])
[Opinion] Social Security Trustees Report Shows Modest Improvement in Financial Outlook
"What will happen if the trust fund is exhausted in 2035, as projected? Social Security is mostly a pay-as-you-go program, so current revenues will still be sufficient to cover 80 percent of promised benefits.... [T]he system would survive, and beneficiaries would still be better off than under some 'reform' proposals that would preemptively cut benefits more ... While momentum is growing to shore up the program and expand benefits through increased revenues, so far this is not a bipartisan movement." (Economic Policy Institute)
Richard Thaler Wants to Use 401(k)s to Boost Social Security Payments
"Mr. Thaler, who won the Nobel Prize in 2017 for his work on behavioral economics, said Americans should be allowed to contribute more into Social Security using a portion of their 401(k) benefits when they retire, which would increase the size of their monthly Social Security checks. Allowing retirees to send up to perhaps $100,000 or $250,000 of their 401(k) balances to the Social Security Administration would deliver an inflation-adjusted annuity, guaranteed by the federal government at fair actuarial value over a retiree's lifetime -- which companies in the private sector are loath to do, said Mr. Thaler[.]" (InvestmentNews; subscription may be required)
Estimates of the Financial Effects on the Social Security Program Assuming Enactment of the 'Protecting and Preserving Social Security Act' (PDF)
21 pages. "Under the proposal, the OASDI program would be able to pay 100 percent of scheduled benefits through 2052, and 91 percent in 2053 after combined trust fund reserve depletion, with the percentage payable declining to 86 percent in 2092. Enactment of the three provisions of this proposal would reduce the long-range OASDI actuarial deficit of 2.84 percent of taxable payroll under current law to 1.08 percent of payroll under the proposal." (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
Social Security: Major Decisions in the House and Senate Since 1935
98 pages. "The Social Security program, enacted in 1935, has been amended numerous times. Lists and summaries of individual major Social Security amendments may illuminate the tone and context of the debate of the program in the House and Senate. Major statutory decisions made by Congress on the Social Security program, vote information, summaries of major legislative actions, descriptions of floor amendments and congressional debate may be informative to current discussions of the Social Security program." [CRS Report RL30920, updated Mar. 28, 2019] (Congressional Research Service [CRS])
State and Local Government Spending on Public Employee Retirement Systems (PDF)
"In the wake of the 2008-09 market decline, nearly every state and many cities have taken steps to improve the financial condition of their retirement plans and to reduce costs.... This update provides figures for public pension contributions as a percentage of state and local government direct general spending for FY 2016, and projects a rate of spending on pensions on an aggregate basis for FY2017." (National Association of State Retirement Administrators [NASRA])
Estimates of the Financial Effects on Social Security of the Child Rearing and Development Leave Empowerment Act (CRADLE Act) (PDF)
"This proposal would allow eligible parents to receive parental leave benefits based on births and adoptions in years 2021 through 2025. The basic monthly parental leave benefit would be equal to the primary insurance amount (PIA) ... as if the parent had become disabled on that date.... Those who elect to receive parental leave benefits for a specified number of months ... would have their normal retirement age (NRA) and their earliest eligibility ages (EEA) increased by twice the specified number of months of parental leave benefit received.... We estimate that, if enacted, this proposal would have a negligible effect on the long -range OASDI actuarial balance (that is, less than 0.005 percent of taxable payroll)." (U.S. Social Security Administration [SSA])
[Opinion] This New Social Security Bill Could Make Social Security Even Better
"The [Social Security 2100 Act], which currently has 202 co-sponsors in the House of Representatives, includes four benefit enhancements: [1] Uses the Consumer Price Index for the Elderly (CPI-E) to adjust benefits for inflation.... [2] Raises the first factor in the benefit formula from 90% to 93%, which would slightly raise replacement rates for all. [3] Increases thresholds for taxation of benefits under the personal income tax ... [4] Increases the special minimum benefit for those with very low earnings." (Alicia Munnell, via MarketWatch)
Estimates of the Financial Effects on Social Security of the 'Social Security Expansion Act' (PDF)
24 pages. "Trust Fund reserves would be extended from 2034 under current law to 2071 ... Under current law, 79 percent of scheduled benefits are projected to be payable on a timely basis in 2034 after depletion of the combined trust fund reserves ... Under the proposal, 89 percent of scheduled benefits are projected to be payable in 2071 after depletion of the combined trust fund reserves ... Enactment of the eight provisions of this proposal would reduce the long-range OASDI actuarial deficit of 2.84 percent of taxable payroll under current law to 0.62 percent of payroll under the proposal." [Act introduced on Feb. 13, 2019 by Sen. Bernie Sanders (D-VT) and Rep. Peter DeFazio (D-OR).] (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
Social Security: Revisiting Benefits for Spouses and Survivors
35 pages. "This report presents the current-law structure of auxiliary benefits for spouses, divorced spouses, and surviving spouses. It makes note of adequacy and equity concerns of current-law spousal and widow(er)'s benefits, particularly with respect to female beneficiaries, and discusses the role of demographics, the labor market, and current-law provisions on adequacy and equity. The report concludes with a discussion of proposed changes to spousal and widow(er) benefits to address these concerns." [Report R41479, updated Feb. 6, 2019] (Congressional Research Service [CRS])
Estimates of the Financial Effects on Social Security of the Social Security 2100 Act (PDF)
25 pages. "Assuming enactment of the [Social Security 2100 Act], we estimate that the combined Social Security Trust Fund would be fully solvent throughout the 75-year projection period ... [T]he OASDI program would meet the further conditions for sustainable solvency, because projected combined trust fund reserves would be growing as a percentage of the annual cost of the program at the end of the long-range period. The proposal includes eight provisions with direct effects on the OASDI program[.]" (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
House Democrats Unveil Social Security Expansion Bill
"[T]he Social Security 2100 Act ... would expand Social Security benefits across the board and prolong the program's solvency for the next 75 years and beyond. The legislation finances a more generous benefit and cost-of-living adjustment formula, a reduction in income taxes on benefits and the closure of Social Security's long-term funding gap by lifting the cap on income subject to payroll taxes and raising those tax rates." (The Huffington Post)
Proposals to Keep Older People in the Labor Force (PDF)
25 pages. "[This paper] explores three initiatives to help people make better-informed work and retirement decisions: [1] establishing that age 70 is the nation's full retirement age; [2] restating 401(k) balances as flows of retirement income; and [3] instituting workplace seminars for employees in their 50s about the advantages of working longer. [It then] turns to the employer's side with two proposals: [1] reintroducing mandatory retirement ... and [2] undertaking a massive public education campaign to make the business case for older workers." (Alicia H. Munnell and Abigail N. Walters, for The Brookings Institution)
Enhancing Work Incentives for Older Workers: Social Security and Medicare Proposals to Reduce Work Disincentives (PDF)
24 pages. "[The authors consider three proposals:] ... [1] eliminating the earnings test for participants between age 62, the early retirement age (ERA), and the full retirement age (FRA) ... [2] creating a paid-up status for Social Security, a point at which employees and employers would no longer be required to pay the payroll tax and earnings would not alter future benefits.... [3] a paid-up status for Medicare, coupled with a policy shift for Medicare that would return the program to its original status as the primary payer for covered expenditures rather than its current status as the secondary payer." (Robert L. Clark and John B. Shoven, for The Brookings Institution)
Modernizing Social Security: Minimum Benefits
"Social Security's minimum benefit for retirees with very low career earnings does not prevent poverty and is withering away due to a design flaw. A broad consensus exists for enhancing this benefit to at least keep full-time, full-career workers out of poverty. Reform proposals, though, do differ over the extent to which part-time workers and those with shorter careers should also be eligible for a minimum benefit. Overall, any improved minimum benefit would reduce retiree poverty, and its cost could be offset by reducing benefits somewhat for higher earners." (Center for Retirement Research at Boston College)
[Opinion] People Who Saved for Retirement Are Being Punished by Social Security Taxes
"When Congress made Social Security benefits taxable in 1983, lawmakers didn't index the tax thresholds to inflation. They 'forgot' inflation again when adding a second layer of taxation in 1993. That means the proportion of recipients who have to pay federal income taxes on their benefits keeps increasing. Initially, only 1 in 10 Social Security recipients had to pay any federal tax. Now, it's over half." (MarketWatch)
Addressing Social Security's Solvency While Promoting High Labor Force Participation
"Income and payroll taxes may cause households to retire earlier than maximal society-wide efficiency might favor.... Social Security reforms that seek to encourage longer careers might be able to deliver higher tax revenues with less sacrifice of household utility than would otherwise be the case.... The Social Security benefit formula, through its indexing of past earnings, tends to leave few incentives to work past the early 60s.... [A] case can be made for re-examining the indexing formula." (Michigan Retirement and Disability Research Center, Univ. of Michigan)
CBO's Long-Term Social Security Projections: Changes Since 2017 and Comparisons With the Social Security Trustees' Projections (PDF)
20 pages. "The projected 75-year actuarial balance ... has not changed as a percentage of gross domestic product (GDP) since last year ... As a percentage of taxable payroll, the projected 75-year actuarial balance has improved slightly ... CBO projects larger deficits in Social Security's finances than do the Social Security Trustees. That difference is largely explained by CBO's and the trustees' different projections of several key inputs into estimates of the system's finances: the population, earnings subject to Social Security payroll taxes, real interest rates." (Congressional Budget Office [CBO])
[Opinion] Comments on Proposed Changes to Actuarial Standard of Practice No. 32 (ASOP 32) Applicable to Social Security
"[T]he existing guidance in Section 3.7 implies that the Social Security actuary should project future expected long-range actuarial balances as part of the Program's annual valuation. Such a projection would be helpful to the general public and to members of Congress in assessing the program's long-range financial adequacy. Therefore, [the author believes] the guidance in this section should not be deleted, as proposed.... [Further, the] standard should discourage use of the term, 'Sustainable Solvency.' " (Ken Steiner, FSA Retired)
Estimates of the Financial Effects on Social Security of H.R. 6933, the 'Equal Treatment of Public Servants Act of 2018' (PDF)
"This Bill would generally replace the windfall elimination provision (WEP) with a new formula ... for individuals becoming eligible for OASDI benefits in 2025 or later. The proposal would also provide for a rebate payment starting in 2020 for individuals affected by the current WEP.... Over the period 2019 through 2028, ... the net program cost for the OASDI program would be increased by about $25.0 billion. Over the long-range 75-year period, ... enactment of the Bill would increase (improve) the OASDI actuarial balance by 0.04 percent of taxable payroll." (U.S. Social Security Administration [SSA])
Estimates of the Financial Effects on the Social Security Program of the 'Surviving Widow(er) Income Fair Treatment Act of 2018' (PDF)
"[E]nactment of this Bill [S. 3457] would result in a net increase in OASDI benefit cost starting in 2020, reducing (worsening) the long-range OASDI actuarial balance by 0.05 percent of taxable payroll, from a deficit of 2.84 percent of payroll under current law to a deficit of 2.89 percent of payroll ... The estimated year of combined OASI and DI Trust Fund reserve depletion would remain at 2034." (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
Modernizing Social Security: Widow Benefits
"Social Security widow benefits have been declining -- relative to the couple's benefit -- due to the rising labor force activity of women. In response, policy experts have proposed increasing the widow benefit, particularly for those with low to moderate incomes. To cover the cost, they would reduce the spousal benefit, essentially shifting money from when both spouses are alive to when only one member is alive. This policy appears to offer a well-targeted and fiscally responsible way to further reduce poverty for widows." (Center for Retirement Research at Boston College)
Estimates of the Financial Effects of Specific Proposed Modifications to Social Security
"Listed below is a broad range of policy options that would address Trust Fund solvency and other issues related to Social Security benefits and financing.... Following a brief description of each option [are] estimates of the financial effect on the combined OASI and DI programs over the long-range period (the next 75 years) and for the 75th year ... [and] a link to the memorandum containing this policy option." (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
How Should Social Security Adjust When People Live Longer?
"This brief outlines the implications of three approaches to adjusting Social Security for longer lives: [1] making no adjustment, which has applied over most of Social Security's history; [2] keeping constant the expected number of retirement years; and [3] keeping constant the relative share of life in retirement. Compared to age 65 retirement in 1940, people under each rule would retire in 2100 at age 65, 79, and 76, respectively." (Urban Institute)
How Would Indexing for Improvements in Life Expectancy Affect Social Security Trust Fund Balances?
"Adjusting Social Security retirement ages as people live longer would significantly improve trust fund balances over the long run, though it would have only modest effects in the short term. By the 75th year, Social Security actuaries project that raising the retirement age by indexing it to life expectancy would reduce annual deficits by one-third to one-half, depending on the adjustment, and improve actuarial balances by one-fifth to two-fifths." (Urban Institute)
Highlights from the Social Security Trustees Annual Report
"The Board reported that for the first time since 1982, the total cost of Social Security retirement benefits paid in 2018 will exceed the total income generated by the fund, including tax revenue and income from investments.... The Board projects that the combined OASDI Trust Fund will only be sufficient to fully cover expected costs until 2034, using the intermediate assumptions. After this point, the Trust Fund would be fully depleted. When the Board uses their high-cost assumptions, this depletion is accelerated to 2029, while the fund would remain fully solvent for the 75-year period under the Board's low-cost assumptions." (Robert W. Baird & Co.)
Social Security: Minimum Benefits (PDF)
26 pages. "In 2017, about 39,347 of the 62 million Social Security recipients qualified for the minimum benefit.... The Social Security Administration estimates that the provision will have no effect on workers turning 62 in 2019 or later.... Some recent proposals would redesign the minimum benefit.... [A] new minimum benefit provision could be introduced, the standard benefit could be increased for people who worked for many years at low earnings, or a fixed dollar-benefit could be introduced." [Report R43615, July 20, 2018] (Congressional Research Service [CRS])
[Opinion] A Slightly Different Actuarial Perspective on the 2018 Social Security Trustees Report
"Since there are no mechanisms in current Social Security law to automatically adjust tax rates or benefits when the system falls out of 75-year actuarial balance or falls out of 'Sustainable Solvency', there is no way to 'ensure' Sustainable Solvency over a period longer than one year.... [A]chieving sustainable solvency with reform changes does not mean that the system's financial problems will be solved forever[.]" (Ken Steiner, FSA Retired)
Social Security Cost Estimates for S. 3147, the Social Security Administration Fairness Act (PDF)
"[T]he proposal would make both Social Security monthly benefits and Medicare coverage available beginning with the first full month after the onset of disability.... [E]limination of these waiting periods ... would increase (worsen) the long-range OASDI actuarial deficit by 0.17 percent of taxable payroll, and would increase the annual deficit for the OASDI program by 0.19 percent of payroll for 2091." (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
An Actuarial Perspective on the 2018 Social Security Trustees Report (PDF)
10 pages. "Social Security's short-range OASDI financial projection is worse than the projection made a year ago.... Moving the short-range estimate period forward one year reduced the fund ratio by 18 percentage points ... The actuarial balance worsened, from a negative 2.83 percent to a negative 2.84 percent, from the 2017 to the 2018 Trustees Report." (American Academy of Actuaries)
Retirement of Baby Boomers Stresses Social Security
"In 1980, there were 19 adults 65 years and older in America for every 100 people between 18 to 64[.] ... This ratio ... increased to a ratio of 21 to 100 in 2010.... However, between 2010 and 2017 ... the ratio of retiree-aged people to working-aged people [increased] to 25 for every 100.... The concern of this stress on retirement programs ... came to light when the first wave of baby boomers turned 65 in 2011. An additional 10,000 turn 65 each day ... and with declining birth rates (the lowest in 30 years), the concern continues to grow." (U.S. News & World Report)
Wake Up, Millennials: What the Latest Social Security Trustees Report is Telling You
"If Congress takes no action to close this gap prior to 2034, system benefits will effectively be reduced by 21%, across-the-board at that time. To put the program back in long-term balance prior to 2034 will require something like a 22% across-the-board decrease in benefits or a 28% increase in the payroll tax[.]" (Ken Steiner, FSA Retired)
Social Security Programs and Retirement Around the World: Working Longer
"In the two decades since the project began, the dramatic decline in men's labor force participation has ended and been replaced by sharply rising participation rates. Older women's participation has been rising as well.... [The authors] document trends in participation and employment and also consider factors that may help to explain these changes in behavior." (National Bureau of Economic Research [NBER]; purchase required for full document)
Social Security: Options for Potential New Automatic Adjustment Features (PDF)
"Under an automatic adjustment approach, changes to keep the system in positive long-range actuarial balance would be made on a periodic basis. These changes could be in the form of an increase in revenue, an adjustment in the total projected benefits over the recipients' lifetimes, or some combination of the two.... This issue brief examines automatic adjustment options, including their advantages and disadvantages." (American Academy of Actuaries)
A Targeted Minimum Benefit Plan: A New Proposal to Reduce Poverty Among Older Social Security Recipients
"[The authors] propose an effective and relatively inexpensive targeted program to provide a minimally adequate floor to old-age income through the program. This minimum benefit plan would provide a cost-effective method for reducing elder poverty to low levels. A key element is that the benefit would not count toward other social programs' income eligibility thresholds. Other aspects include an income-tested benefit that would bring beneficiaries to the poverty threshold; application by filing of a 1040 income tax return; and setting of benefit levels and distribution through the Social Security Administration." (Urban Institute)
Estimates of the Financial Effects on Social Security of H.R. 4584, the 'Student Security Act of 2017' (PDF)
"H.R. 4584 specifies that for every $550 (in 2018 dollars) in student loan balance that a person chooses to have forgiven, his or her [earliest eligibility age] and [normal retirement age] would be increased by one month.... [These] estimates [assume] that one-half of eligible student loan amounts would be forgiven with this offer.... [T]he long-range OASDI actuarial deficit would decrease from 2.83 percent of payroll under current law to 2.52 percent of payroll assuming enactment of the Bill." (U.S. Social Security Administration [SSA])
Changes to CBO's Long-Term Social Security Projections Since 2016
"This report explains the changes to CBO's long-term Social Security projections since last year. Compared with those made in July 2016, CBO's latest projections indicate a slight improvement in the financial outlook for Social Security." (Congressional Budget Office [CBO])
Social Security: The Trust Funds (PDF)
21 pages. "This report covers how the Social Security program is financed and how the Social Security trust funds work. It will be updated annually to reflect current projections of the financial status of the Social Security trust funds." [Report RL33028, Sept. 12, 2017] (Congressional Research Service [CRS])
Social Security: What Would Happen If the Trust Funds Ran Out? (PDF)
21 pages. "If a trust fund became depleted, there would be a conflict between two federal laws.... [B]eneficiaries would still be legally entitled to their full scheduled benefits. However ... the Social Security Administration (SSA) would not have legal authority to pay full Social Security benefits on time.... After insolvency, Social Security would continue to receive tax income, from which a majority of scheduled benefits could be paid.... Social Security beneficiaries would remain legally entitled to full, timely benefits and could take legal action to claim the balance of their benefits." [Report RL33514, updated June 12, 2019] (Congressional Research Service [CRS])
Estimates of the Financial Effects on Social Security of H.R. 3112, the 'Providing Choice for Social Security Retirees Act' (PDF)
"H.R. 3112, the 'Providing Choice for Social Security Retirees Act' ... would provide a 'partial lump sum' option for workers becoming initially entitled for retired worker benefits in 2019 or later at an age older than their normal retirement age (NRA). At the time of their initial benefit entitlement (that is, the first month for which benefits will be received), these workers could choose to receive a lump sum amount equivalent to 2 percent (one-fourth of the value) of any 8 percent delayed retirement credits (DRCs) earned up to that time.... Table 1 ... presents annual and 75-year-summarized cost rates, income rates, balances, and changes in annual balances for the OASDI program under the proposal.... [F]or the latter years of the long-range projection period shown in Table 1, enactment of the proposal would have a relatively small net effect on OASDI cost." (U.S. Social Security Administration [SSA])
[Opinion] Social Security: A Promise Breaking?
"While Social Security is not going 'bankrupt,' it's clear it will have to change in both a fundamental and disruptive way. For this reason, many financial professionals are telling their younger clients to plan on not receiving Social Security when they retire." (Fiduciary News)
[Opinion] The American Academy of Actuaries Stumbles on Social Security 'Sustainable Solvency'
"The condition of 'Sustainable Solvency' developed by the SSA actuaries is based on exact realization of assumptions made today about the next 75 years.... [T]here exists no mechanism in current Social Security law to maintain actuarial balance (or Sustainable Solvency) over time. Therefore, a condition of Sustainable Solvency achieved at the time of eventual System reform will not guarantee or 'ensure' sustainable solvency for any specific period of time, and the AAA's call for implementation of a solution 'to ensure sustainable solvency of Social Security' is, in our opinion, potentially misleading to the public, Congress and other intended users of the AAA's Issue Brief." (Ken Steiner, FSA Retired)
An Actuarial Perspective on the 2017 Social Security Trustees Report (PDF)
11 pages. "The combined Social Security trust fund reserves are projected to become depleted during 2034, the same year as projected in last year's report. If changes are not implemented by that date, only about 77 percent of scheduled benefits would be payable after 2034, declining to 73 percent in 2091.... To bring Social Security into actuarial balance for the next 75 years ... changes equivalent to either an immediate increase of 2.76 percentage points in the payroll tax rate, or an immediate decrease of about 17 percent of benefits for all current and future beneficiaries, or some combination thereof, is required." (American Academy of Actuaries)
Estimates of the Financial Effects on Social Security of the 'Protecting and Preserving Social Security Act' (PDF)
22 pages. "Assuming enactment of the proposal, the projected trust fund reserve depletion year for theoretical combined OASDI and DI Trust Funds would be extended to 2059. Under current law, the projected trust fund reserve depletion year for the combined trust funds is 2034." (U.S. Social Security Administration [SSA])
[Opinion] Social Security Slouches Towards Insolvency
"Each year since 2010, Social Security has been operating at a cash flow deficit, meaning the annual costs exceed income from payroll taxes and the taxation of benefits. In 2022, the annual program costs will be more than total income, which also includes interest on the trust fund assets. At this point the trust fund will be drawn down. By 2034, the trust fund will be exhausted, at which point tax income would only be enough to pay for 77 percent of benefits." (Charles Blahous, Manhattan Institute for Policy Research)
Estimates of the Financial Effects on Social Security of H.R. 2855, the Social Security for Future Generations Act of 2017 (PDF)
"Assuming enactment of the proposal, the projected trust fund reserve depletion year for the theoretical combined OASI and DI Trust Funds would be extended to 2049. Under current law, the projected trust fund reserve depletion year for the combined trust funds is 2034. The proposal includes six provisions ... with direct effects on the OASDI program." (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
Social Security Actuary Estimates Effect of Proposed Reduction of Payroll Tax Rate (PDF)
"The proposal would reduce the employee portion of the payroll tax rate from 6.2 to 4.2 percent on annual earnings below the applicable threshold; the employer portion would remain at 6.2 per cent. The tax rate for self-employed workers would be reduced from 12.4 to 10.4 percent on annual earnings below the applicable threshold.... [T]hat enactment of this proposal would increase the long-range OASDI actuarial deficit by about 0.77 percent of taxable payroll, from 2.66 percent of payroll under current law to 3.43 percent of payroll under the proposal." (Office of the Chief Actuary, U.S. Social Security Administration [SSA])
[Opinion] Why Raising Social Security's 'Full Retirement Age' Is a Bad Idea
"[T]he retirement age has little to do with how long people work, and a lot to do with how much money they get.... [As] the FRA rises from 66 to 67, the worker retiring at 62 sees his monthly benefit cut from 75% to 70%of the full benefit. The worker who increases his retirement age from 66 to 67 sees no cut in the monthly benefit but receives benefits for one less year, reducing his lifetime benefit. So raising the FRA is a cut in benefits either way." (Alicia H. Munnell, in MarketWatch)
The Growing Gap in Life Expectancy by Income: Recent Evidence and Implications for the Social Security Retirement Age (PDF)
34 pages. "This report provides a brief overview of the concept of life expectancy, how it is measured, and how it has changed over time in the United States. While life expectancy may be studied in a variety of contexts, this report focuses on the link between life expectancy and [socioeconomic status], as measured by lifetime income. In particular, this report synthesizes recent research on [1] the life expectancy gap by in come and [2] the relationship between this gap and Social Security benefits. Finally, this report discusses the implications of this research for one type of Social Security reform proposal: increasing the Social Security retirement age." [CRS Report R44846, May 12, 2017] (Congressional Research Service [CRS])
[Opinion] New Approach to Social Security's Full Retirement Age Would Eliminate 83% of Cash Shortfall
"[The Save Our Social Security Act of 2016 (S.O.S. Act)] may be best remembered as providing a unique solution to Social Security's full retirement age that would eliminate a whopping 83% of the program's budgetary shortfall ... The S.O.S. Act would continue raising the FRA by two months per year between 2022 and 2034 until it hits age 69 in 2034. At this point, the FRA would be indexed to longevity ... At the same time, the maximum age for delayed retirement credits would increase in step with the full retirement age, keeping a three-year gap in place." (Motley Fool)
Proposed 'Social Security 2100 Act' Cuts Taxes, Strengthens Benefits, Ensures Social Security Through This Century
"Over 11 million Social Security recipients would see a tax cut ... [The bill provides] a modest increase for all beneficiaries starting in 2016, equivalent to 2% of the average benefit.... [and improves] the annual cost of living adjustment (COLA) formula ... The new minimum benefit will be set at 25% above the poverty line rather than below it.... [The bill would] phase in an increase in the contribution that, for the average worker, equals an additional 50 cents per week every year to keep the system solvent.... This legislation would apply the payroll tax to wages above $400,000." (Rep. John B. Larson (D-Conn.))
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