Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 30, 1994 TAG: 9501120010
SECTION: EDITORIAL PAGE: A10 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Social Security is going broke. Not now, not even in a few years - but soon enough, if something isn't done.
The system needs to be fixed. Current retirees, on average, are receiving retirement checks far in excess of the contributions they made while they were working. But their good deal has been bought at the expense of future generations.
The last Social Security fix, in 1983, helped significantly. But it was supposed to assure solvency for the system through the retirement of Baby Boomers. It didn't.
Even so, Washington shows little eagerness to embrace the findings of a Bipartisan Commission on Entitlement and Tax Reform, which issued its report earlier this month.
Findings such as: "Today, there are almost five working-age persons for each person over 65. In 2030, there will be fewer than three working-age persons for each person over 65."
Or this one: If current trends continue, when today's 30-year-olds turn 65, Social Security will be bankrupt.
A recent book, Retooling Social Security for the 21st Century, offers some interesting numbers. The average single American man who retired in 1980 will get Social Security checks worth $39,000 more than his contributions and the interest they might have earned. The average Boomer retiring in 2010 will have paid $38,000 more into the system than he can hope to get out of it.
It happens this way because current retirees paid relatively low payroll taxes for much of their working lives. (In 1960, the basic Social Security tax was 6 percent. Now it's up to 15 percent. As recently as 1960, the maximum Social Security tax on any employee was $277. In 1993, it was $5,715. Now there's no ceiling at all.) And current retirees saw dramatic benefit increases legislated in the early 1970s.
A Social Security fix could include such actions as: (1) Raising the retirement age. Sixty-five was picked when average U.S. life expectancy was under 60 years; today it's 76. (2) Reducing cost-of-living-adjustments. (3) Introducing more means-testing for benefits. (4) Encouraging more private saving, such as with tax-deductible IRAs. (5) Exploring privatization options.
Whatever. America has always been about the future, about a better life for our children. Generational justice, as well as fiscally sound planning, calls for intervention sooner rather than later to assure Social Security's solvency.
The politicians can't run from this challenge forever.
by CNB