{"id":1488511,"date":"2024-09-07T13:20:00","date_gmt":"2024-09-07T17:20:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1488511"},"modified":"2024-09-07T13:20:00","modified_gmt":"2024-09-07T17:20:00","slug":"social-security-facing-63-trillion-in-unfunded-liabilities","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/social-security-facing-63-trillion-in-unfunded-liabilities\/1488511\/","title":{"rendered":"Social Security Facing $63 Trillion In Unfunded Liabilities"},"content":{"rendered":"

Social Security Facing $63 Trillion In Unfunded Liabilities<\/span><\/p>\n

\n

Authored by Andrew Moran via The Epoch Times<\/a> (emphasis ours),<\/em><\/p>\n

Social Security is facing $63 trillion in long-term unfunded liabilities<\/strong>, according to the 2024 Old-Age, Survivors, Disability Insurance (OASDI) trustees report.<\/p>\n

A person wearing a mask stands outside a Social Security Administration building in Burbank, Calif., on Nov. 5, 2020. VALERIE MACON\/AFP via Getty Images<\/em><\/a><\/p>\n

The report<\/a>\u00a0looked at two things: how much money will be missing indefinitely and how much will be missing in the next 75 years. The report determined that there will be a permanent $62.8 trillion deficit and about a $23 trillion shortage for the next 75 years.<\/p>\n

Officials explained that these numbers show how much less money they will have after the money saved up in trust funds runs out.<\/strong><\/p>\n

\u201cThe annual shortfalls after trust fund reserve depletion rise slowly and reflect increases in life expectancy,\u201d the report reads.<\/p>\n

\u201cThe summarized shortfalls over the infinite horizon, as percentages of taxable payroll and GDP, are larger than the shortfalls for the 75-year period.\u201d<\/p>\n

OASDI trustees noted that the shortfall could be eliminated if the combined payroll tax rate was raised to \u201cabout 17.0 percent\u201d or if there was a \u201cpermanent reduction in benefits for all current and future beneficiaries by about 26.5 percent.\u201d<\/p>\n

Laurence Kotlikoff, professor of economics at Boston University, told The Epoch Times that assessing the current infinite unfunded liability is imperative.<\/p>\n

\u201cThere\u2019s nothing in economics that says you should just look at 75 years and assume everybody\u2019s going to be dead the day after<\/strong>,\u201d Kotlikoff said.<\/p>\n

\u201cIt\u2019s like operating on half of the cancer, removing half a cancer, and telling your patient to come back in 10 years, and when they do, it\u2019s twice as big, and you\u2019re operating out on half.<\/p>\n

\u201c[That\u2019s] the practice here in our country dealing with Social Security.\u201d<\/strong><\/p>\n

This is not the first report to spotlight the deteriorating fiscal state of the retirement scheme and other federal programs.<\/p>\n

In February, the Treasury Department released<\/a> the \u201cFinancial Report of the United States Government.\u201d<\/p>\n

It concluded that U.S. taxpayers face more than $78 trillion in long-term unfunded obligations for Social Security and Medicare.<\/p>\n

The problem, according to Mark Warshawsky, a senior fellow at the American Enterprise Institute, is that these outlooks are based on rosy scenarios, meaning that the United States will not grapple with a financial crisis, a major military conflict, or another pandemic.<\/p>\n

\u201cTo make matters worse, the [Financial Report] is based on optimistic, indeed unrealistic, assumptions<\/strong>,\u201d he wrote<\/a>, adding that the report suggests that the Trump-era tax cuts will completely lapse, income tax revenues will rise over time, and defense spending will not increase.<\/p>\n

Still, it is valuable to disseminate these numbers to the public, according to Warshawsky.<\/p>\n

\u201cDespite its faults, the undoubtedly large effort needed to produce the [Financial Report] annually is worthwhile and it should get more attention from policymakers, the media, and the public,\u201d he said.<\/p>\n

People shop at a supermarket in Glendale, Calif., on Jan. 12, 2022. Robyn Beck\/AFP via Getty Images<\/em><\/a><\/p>\n

Last week, the nonpartisan Congressional Budget Office (CBO) projected<\/a> that an essential Social Security trust fund\u2014the Old-Age and Survivors Insurance Trust Fund\u2014will be exhausted by 2033.<\/p>\n

Additionally, the Disability Insurance Trust Fund balance could run dry by 2064.<\/strong><\/p>\n

According to CBO Director Phillip Swagel, if Social Security is left intact over the next decade, recipients would receive a 21 percent cut<\/a> to their benefits.<\/p>\n

Over the years, lawmakers on both sides of the aisle have presented a series of solutions to rescue Social Security.<\/p>\n

In March, the Republican Study Committee<\/a>, a group of more than 170 House GOP representatives, published its fiscal year 2025 budget proposal, championing raising the eligibility age to 67 from 65.<\/p>\n

President Joe Biden and other Democrats have said that ensuring that the \u201chighest-income Americans pay their fair share\u201d is a feasible response to the looming funding shortage for the top retirement programs.<\/p>\n

\u201cNo benefit cuts,<\/strong>\u201d the White House said<\/a> in a March 11 statement. \u201cThe president opposes any proposal to cut benefits, as well as proposals to privatize Social Security.\u201d<\/p>\n

Calls to Embrace Reform<\/h2>\n

But many economists and financial experts say that public policymakers need to embrace reform.<\/p>\n

\u201cWhat we need is not just a smart Social Security fix, but we need to have a radical reform of our fiscal system<\/strong>,\u201d Kotlikoff said. \u201cIt\u2019s not doodling around the current system.\u201d<\/p>\n

Indeed, he has proposed several different measures that Washington could institute to keep the Social Security system intact through what he calls a \u201cPersonal Security System.\u201d<\/p>\n

Kotlikoff has recommended phasing out the existing Social Security system while paying off all accrued obligations to current retirees and workers and \u201creplacing it with a fully funded, progressive retirement account system.\u201d<\/p>\n

As for immediate solutions, Doug Carey, a chartered financial analyst, said a change to the payroll tax would be appropriate, although it would be hard to pass in Congress.<\/p>\n

\u201cCurrently, the payroll tax for both employees and employers is 6.2 percent for Social Security,\u201d Carey told The Epoch Times.<\/p>\n

\u201cIncreasing this rate would help with the solvency of the trust fund but would be difficult to pass in Congress since it would raise taxes on most people<\/strong>.\u201d<\/p>\n

Another policy adjustment, according to Carey, is increasing the payroll tax cap.<\/p>\n

\u201cThis is the most popular idea,\u201d he said.<\/p>\n

\u201cCurrently, only earnings up to $168,600 are subject to Social Security taxes. Raising or completely eliminating this limit would go a long way toward increasing the solvency of the trust fund.<\/p>\n

\u201cIt is also more likely to pass Congress since it only hits a small percentage of workers.\u201d<\/p>\n

Revisions to methodology could also serve as a prescription to help keep Social Security afloat, according to Tyler Meyer, a certified financial planner and the owner of QED Wealth Solutions.<\/p>\n

\u201cAnother approach is to modify the benefit formula to slow the growth of benefits for higher earners while protecting lower-income beneficiaries,\u201d Meyer told The Epoch Times.<\/p>\n

\u201cPolicymakers might also consider introducing a means-testing system, where benefits are reduced or eliminated for individuals with substantial retirement income from other sources.\u201d<\/p>\n

Are Benefits Enough?<\/h2>\n

Estimates<\/a> suggest that the Social Security cost-of-living adjustment (COLA) for 2025 will be close to 2.6 percent.<\/p>\n

In today\u2019s inflationary environment, are benefits enough?<\/strong><\/p>\n

According to a study<\/a> by The Senior Citizens League, the value of seniors\u2019 benefits has decreased by 20 percent since 2010.<\/p>\n

Researchers found that, on average, retirees would need to receive a $4,440 annual boost\u2014or $370 per month\u2014\u201cto rebuild their lost value.\u201d<\/p>\n

\u201cThe reality is that COLAs have become less and less likely to match inflation over time<\/strong>,\u201d the report reads.<\/p>\n

\u201cIn the 1990s and 2000s, 60 percent of COLAs beat inflation. In the 2010s, only 40 percent did. Through the 2020s so far, only one COLA out of five [2023; 8.7 percent] has done so.\u201d<\/p>\n

This might be a concerning trend for future retirees after the Employee Benefit Research Institute (EBRI) discovered in April that 88 percent<\/a> of workers anticipate Social Security to be a top source of actual or expected income in retirement.<\/p>\n

\u201cSocial Security is normally an important part of the guaranteed income portion of the plan as a means to cover essential expenses,\u201d Stephen Kates, principal financial analyst for Retire Guide, told The Epoch Times.<\/p>\n

\u201cIn the absence of Social Security, retirees will need to replace it with other sources of guaranteed income like pensions or annuities.<\/strong><\/p>\n

\u201cA key consideration for retirees is the ability to cover all essential expenses with guaranteed income.\u201d<\/p>\n

For workers engaged in planning their retirements, it is vital to work with a financial adviser for guidance on how to turn savings into an income plan.<\/p>\n

\u201cWith less Social Security income, your retirement plan may need adjusting, and burying your head in the sand will not help,\u201d Kates said.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 09\/07\/2024 – 09:20<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/social-security-facing-63-trillion-unfunded-liabilities<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Social Security Facing $63 Trillion In Unfunded Liabilities Authored by Andrew Moran via The Epoch Times (emphasis ours), Social Security is facing $63 trillion in…<\/p>\n","protected":false},"author":0,"featured_media":1488512,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1488511","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1488511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1488511"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1488511\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1488512"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1488511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1488511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1488511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}