55577725 - Social Security Bulletin, Vol. 70, No. 3, 2010...

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Unformatted text preview: Social Security Bulletin, Vol. 70, No. 3, 2010 111 Introduction As a result of changes to Social Security enacted in 1983, beneFts are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted. 1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of sched- uled beneFts. Thus, the Congress will need to make changes to the scheduled beneFts and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in beneFts of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some com- bination of these changes, would be sufFcient to allow full payment of the scheduled beneFts for the next 75 years. Since the inception of the Social Security program in 1935, scheduled beneFts have always been paid on a timely basis through a series of modiFcations in the law that will continue. Social Security provides a basic level of monthly income to workers and their fami- lies after the workers have reached old age, become disabled, or died. The program now provides beneFts to over 50 million people and is Fnanced with the payroll taxes from over 150 million workers and their employers. ¡urther modiFcations of the program are a certainty as the Congress continues to evolve and shape this program, re¢ecting the desires of each new generation. This article describes the Fnancial status of the Social Security program, including an analysis of the concepts of solvency and sustainability and the relationship of Social Security to the overall federal uniFed budget. The future is uncertain in many respects, and based on new information, projections of the Fnancial status of the Social Security program vary somewhat over time. What is virtually certain * The author is the Chief Actuary of the Social Security Administration. Note: Contents of this publication are not copyrighted; any items may be reprinted, but citation of the Social Security Bulletin as the source is requested. To view the Bulletin online, visit our Web site at http://www.socialsecurity.gov/policy. The Fndings and conclusions presented in the Bulletin are those of the authors and do not necessarily represent the views of the Social Security Administration. Selected Abbreviations DI Disability Insurance GDP gross domestic product HI Hospital Insurance NRA normal retirement age OASDI Old-Age, Survivors, and Disability Insurance OASI Old-Age and Survivors Insurance PAYGO pay as you go T he F uTure F inancial S TaTuS oF The S ocial S ecuriTy P rogram by Stephen C. Goss* The concepts of solvency, sustainability, and budget impact are common in discussions of Social Security, but are not well understood. Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled beneFts. This increase in cost results from so that taxes will be enough to pay for only 75 percent of scheduled beneFts....
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55577725 - Social Security Bulletin, Vol. 70, No. 3, 2010...

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