- #1
PhilKravitz
Is social security well funded and safe?
Social security well funded and safe?
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- #2
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This all comes down to the population type you have.
In the case of places like the UK, where there is an ageing population, there are more people drawing pensions than there are people to support them, so no it isn't well funded and puts a huge stress on the country.
If you have a high level of people working in comparison to those drawing out of it, it can be well funded and 'safe'.
It all comes down to whether or not you have enough people paying into the system to support the required outgoings of it.
In the case of places like the UK, where there is an ageing population, there are more people drawing pensions than there are people to support them, so no it isn't well funded and puts a huge stress on the country.
If you have a high level of people working in comparison to those drawing out of it, it can be well funded and 'safe'.
It all comes down to whether or not you have enough people paying into the system to support the required outgoings of it.
- #3
PhilKravitz
This is part of the reason the US has such a wide open immigration policy to improve the demographic distribution.
- #4
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no...
- #5
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At the moment maybe, but that doesn't mean it's always like that.
My original answer still stands.
One caveat, the only way to maintain a balance between what is paid in and what is paid out, is either to have a continuously expanding population or to have zero population growth.
- #6
- #7
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afaik it's so well funded that the government uses it for other things (as if it's tax revenue or something), but it's not safe
- #8
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This story from 2007 sums it up - $59 Trillion (plus Medicaid - which is expanding) my bold
http://www.usatoday.com/news/washington/2007-05-28-federal-budget_N.htm
"The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.
Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities. State and local government retirement plans account for much of the rest.
This hidden debt is the amount taxpayers would have to pay immediately to cover government's financial obligations. Like a mortgage, it will cost more to repay the debt over time. Every U.S. household would have to pay about $31,000 a year to do so in 75 years.[/I]"
http://www.usatoday.com/news/washington/2007-05-28-federal-budget_N.htm
"The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.
Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities. State and local government retirement plans account for much of the rest.
This hidden debt is the amount taxpayers would have to pay immediately to cover government's financial obligations. Like a mortgage, it will cost more to repay the debt over time. Every U.S. household would have to pay about $31,000 a year to do so in 75 years.[/I]"
- #9
Vanadium 50
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Things that can't go on forever, don't.
- #10
PhilKravitz
What exactly do we mean by unfunded? How much reasonably expected tax income is devoted to covering these? Do we call the 2.5T of the national debt that is ode to social security unfunded?
Unfunded has several possible components
1) reasonable expected to be covered by future tax under existing tax law
2) already covered but invested in T-bills that we expect will be paid back
3) already covered but invested in T-bills that we expect will never be paid back
4) not funded
What percentage of liability is #4? and what percentage #3?
- #11
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The US needs to borrow money to pay it's obligations - what will happen to benefits when interest rates increase?
http://www.cbo.gov/budget/budget.cfm [Broken]
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- #12
rcgldr
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Removing the FICA cap would help, from an older thread:
Modify the Social Security tax cap. Workers pay into the Social Security system on earnings up to $106,800 in 2010. About 83 percent of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security's projected deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved. Other ideas: apply a new Social Security formula to earnings above the current cap or raise the amount of the income cap to apply to 90 percent of all worker earnings.
Modify the Social Security tax cap. Workers pay into the Social Security system on earnings up to $106,800 in 2010. About 83 percent of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security's projected deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved. Other ideas: apply a new Social Security formula to earnings above the current cap or raise the amount of the income cap to apply to 90 percent of all worker earnings.
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- #13
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I have to take some personal responsibility for this mess. I'm a boomer and like a locust, I'm not very destructive on my own. However there are more than 70 million of us and only 34 workers and a juvinile delinquent to take care of us. Fiddling with the percentages ain't going to cure that problem. However, the real blame lies at the feet of the Republicans. The Democrats would long ago have taxed us to death and solved the whole problem if it hadn't been for the GOP.
- #14
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Well... you could convince a ton of people that they need to catch a comet, "now eat this applesauce!"...
- #15
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For the very near future at least (it seems, from my internet researches). But, without legislative changes all entitlement programs are in trouble. Aren't they? From what I've learned, there are ways to effectively deal with the problems, many of which have been extensively discussed at PF. But it requires the political will to do so.
Because the political will to make the necessary changes isn't there, then it would seem that Social Security, at least as we know it now, isn't safe or assured for future generations.
- #16
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From my post number 6 link:
"Michael J. Astrue, Commissioner of Social Security, today announced that the agency is adding 38 more conditions to its list of Compassionate Allowances. This is the first expansion since the original list of 50 conditions - 25 rare diseases and 25 cancers - was announced in October 2008. The new conditions range from adult brain disorders to rare diseases that primarily affect children. The complete list of the new Compassionate Allowance conditions is attached.
“The addition of these new conditions expands the scope of Compassionate Allowances to a broader subgroup of conditions like early-onset Alzheimer’s disease,” Commissioner Astrue said. “The expansion we are announcing today means tens of thousands of Americans with devastating disabilities will now get approved for benefits in a matter of days rather than months and years.”
Compassionate Allowances are a way of quickly identifying diseases and other medical conditions that clearly qualify for Social Security and Supplemental Security Income disability benefits. It allows the agency to electronically target and make speedy decisions for the most obviously disabled individuals. In developing the expanded list of conditions, Social Security held public hearings and worked closely with the National Institutes of Health, the Alzheimer’s Association, the National Organization for Rare Disorders, and other groups."
Social Security funds now cover 88 medical conditions for people under retirement age. Perhaps all non-retirement benefits should be paid from either the medical or welfare programs? This would certainly clarify the problem.
- #17
CAC1001
SS isn't so much the problem, it's Medicare that is the monster. SS, we can always raise the SS tax a bit, and increase the retirement age some. Originally, when SS was signed into law, the average life expectancy was around 64 years-old, and you had to be 65 to start getting SS, so the idea was most people would die before they'd start receiving it anyhow.