By: Bruce Webb

Bruce Webb — Mon, 18 Feb 2008 21:29:01 +0000

Well this post could really use some more numbers. For example what is the projected income gap in 2017? Presumedly payroll tax will still be rolling in the door at 12.4%, an amount that would have been fully sufficient to pay all benefits in 2016, so what would the initial gap actually be? Well you would have to visit the actual Social Security Report and consult tables VI.F7 and VI.F8. The former would tell you the first year toll in inflation adjusted dollars is about $20 billion, the latter would put it in current dollars and put it about $30 billion. When we further note that this $20 or $30 billion is just a fraction of the actual interest being accrued and that the Trust Fund themselves are scheduled to continue growing until 2023 you might begin to wonder what all of the fuss is about. After all the General Fund borrowed the money why shouldn’t it be obligated to pay it back? If the sums needed were really crushing then supporters of Social Security ‘Crisis’ would have a point, but in real terms the cash crunch is really limited to the time period from about 2035 to 2041 and is no more than the current level of deficits.
As for the projected shortage of workers. Well for that we would have to first visit Table V.A1 Principal Demographic Assumptions. There we would see that the Trustees project a rather drastic drop off in both legal and illegal immigration. Why the US, faced with a labor shortage due to an aging population, not reach out as it always has and allow immigrants to fill the gaps is one of the underexamined aspects of ‘Crisis’. Now to Covered Worker Ratio (i.e people paying in to people paying out) for that we need to look at Table V.A2 where we can see that the projected ratio does got to .350 in 2030 up from .205 today. Which is to say from 5/1 to 3/1 (the standard projection never goes to 2 to 1). On the other hand this just takes into account the Aged. If we examine total Dependency Ratio including children we see a ratio of .667 going to .801 or from 3/2 to 5/4 but not approaching the rates of the 1960s and 70s when the ratio was generally over .900.
And all of this assumes some really poor economic numbers going forward. The standard model assumes that Real GDP will drop to 2.3% within the next five years and permanently slide to 2.0% in the ten years after that (Table V.B2). Put in even marginally better numbers and the outlook for Social Security starts looking pretty bright and that of Medicare not as bad as one would think from current rhetoric. All of the tables cited can be linked from this following URL from the Social Security.gov website. There really is no substitute for examining these numbers first hand. In my pretty extensive experience on this topic even most ‘experts’ seem to get their numbers second hand.
http://www.ssa.gov/OACT/TR/TR07/trLOT.html

By: Rick Friedl

Rick Friedl — Sun, 27 Jan 2008 04:00:11 +0000

Well, there weren’t too many baby boomers all these years that we have been paying into the system. If we just stop waging expensive foreign wars, we could restore the funds that the Federal agencies have “borrowed” from the trust fund.

Comments on: Baby Boomer Retirement – What Effect Will It Have On Social Security Solvency?

By: Bruce Webb

By: Rick Friedl