January 8, 2013 — By now you have probably heard the projections that Social Security will have exhausted the trust funds it built up for future payments by 2033. Unless something is done before then, starting that year payments coming in will only be able to fund about 75% of promised benefits. The New York Times just reported a new study by researchers at Harvard and Dartmouth, “Social Security: It’s Worse Than You Think“, that shows that the government is underestimating how long Americans will live and how much Social Security will need to pay out – which makes things even worse than we have been told. The second part of this article tells about a new online service at the Social Security Administration.
Here are some of the conclusions made by Gary King, director of the Institute for Quantitative Social Science at Harvard and Samir S. Soneji, a demographer and assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice:
– Social Security uses “antiquated and unreliable methods” to forecast how long people will live
– King and Soneji project that a 50 year old male will live 13 months longer than the Social Security Administration’s forecast.
– Too many beneficiaries and not enough workers: In 1990 there were 3 workers paying taxes for each social security beneficiary. But by 2031 there will only be 2.4 paying taxes
– The SSA doesn’t take into account current health trends that affect mortality. For example, smoking has declined tremendously, while the incidence of obesity has increased. (One increases projected lifetimes, while the other shortens it)
The authors point out that something needs to be done if future recipients are going to be able to get promised benefits or something close to them. While our politicians are afraid to tackle this issue for fear of invoking the wrath of the AARP and current recipients, there are some solutions:
– Raise payroll taxes
– Reduce benefits
– Raise the annual limit on income subject to the payroll tax (currently capped at $113,700)
Social Security Announces MySocialSecurity Account
The SSA is helping social security recipients avoid long telephone or in-person waits with a new online service, MySocialSecurity. Once registered, recipients can access these services online:
Get your benefit verification letter.
Check your benefit and payment information and your earnings record;
Change your address and phone number; and
Start or change direct deposit of your benefit payment.
You need to register online for the service. To do that you have to provide some personal information about yourself and give answers to some questions that only you are likely to know. Next, you create a username and password that you will use to access your online account. You can sign up yourself at http://www.socialsecurity.gov/myaccount/
Note: Be sure to take our new “What is Your Social Security IQ Quiz“. It will give you a score and detailed explanations to make you a Social Security expert (our best advice, read this article first!).
Anyone have any other suggestions for fixing Social Security? If so we would love to hear them.