Options to Balance Social Security Funds Over the Next 75 Years

13 Pages Posted: 28 Mar 2005

See all articles by Virginia P. Reno

Virginia P. Reno

National Academy of Social Insurance (NASI)

Joni Lavery

National Academy of Social Insurance (NASI); Government of the United States of America - Office of Retirement Policy; Social Security Administration

Date Written: February 2005

Abstract

Social Security is in excellent financial shape over the next decade; it is running surpluses while the rest of the federal government is running deficits. If the Trustees' "best estimates" for the next 75 years hold true, Social Security funds will fall short of benefit costs in about 2042. In that year, taxes coming in will be sufficient to pay 73 percent of benefits promised under current law. Many options are possible to ensure that all legislated benefits can be paid. This brief explores a variety of changes that eliminate all or part of the shortfall. Removing the cap on wages subject to Social Security taxes - now $90,000 - would bring in enough new money to eliminate the deficit. Price-indexing the benefit formula would reduce benefits enough to erase the deficit. Many combinations of changes would remedy the projected shortfall for 75 years and beyond. The brief also notes how proposals to create individual Social Security accounts differ from plans to bring about long-term solvency.

Keywords: Social security solvency, social security reform, private accounts

Suggested Citation

Reno, Virginia P. and Lavery, Joni and Lavery, Joni, Options to Balance Social Security Funds Over the Next 75 Years (February 2005). Available at SSRN: https://ssrn.com/abstract=678549 or http://dx.doi.org/10.2139/ssrn.678549

Virginia P. Reno (Contact Author)

National Academy of Social Insurance (NASI) ( email )

1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904
United States
202-452-8097 (Phone)
202-452-8111 (Fax)

Joni Lavery

Government of the United States of America - Office of Retirement Policy ( email )

500 E Street, SW
Washington, DC 20254
United States

National Academy of Social Insurance (NASI) ( email )

1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904
United States

Social Security Administration ( email )

500 E Street, SW
Washington, DC 20254
United States

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