Retire Smart: Economist's Report Points to Best Job Opportunities for 50-plus Americans
Sunday, May 23, 2010


By Mark Miller
Tribune Media Services
 The debate over the future of Social Security will heat up this month when Washington policymakers convene for two major events focused on reducing the federal deficit. 
Deficit hawks will be peddling the argument that Social Security is careening toward insolvency, and that benefits should be cut because the government can't afford its obligations to the program.
So, is Social Security headed for insolvency? And, is it causing our budget deficit?
Social Security made news earlier this year when it became known that the program will-for the first time-take in less cash this year than it pays out on a current-year basis. It's a pay-as-you-go program, with current benefits funded through the FICA payroll taxes paid by today's workers and employers. But recession-induced unemployment has cut into tax collections, and the number of older unemployed workers filing for benefits has soared.
Meanwhile, Social Security has a huge long-term surplus that has been accumulating since the last "fix" to the program was implemented during the Reagan years. At the time, the FICA tax rate was raised substantially to create a cushion for the future retirement of the huge baby boomer generation.
That tax hike has generated a surplus over the years of about $2.5 trillion, which sits in the Social Security Trust Fund. That's enough to cover benefit payouts until about 2037, according to current estimates. The fund gradually will be exhausted because as boomers start to retire in greater numbers, there won't be enough current workers coming along behind them to keep the program solvent on a pay-as-you-go basis. 
But here's the rub. The surplus funds exist only in an accounting sense, because over the years, the government chose to spend it all for other purposes, creating the illusion of a smaller overall deficit. The Trust Fund's assets are Treasury bonds and other U.S. securities, representing the government's obligation to pay back the Trust Fund to pay for future benefits. 
The dangerous argument likely to be put forward at this month's deficit summits is that the government now can't afford to raise the funds to pay back what it owes to the Trust Fund.
The first summit will be President Obama's National Commission on Fiscal Responsibility and Reform, which holds its first meeting on April 27. The commission is charged with coming up with solutions to the nation's debt and deficit crisis, and while it has no pre-determined agenda, some critics worry that it's made up mainly of deficit hawks and too few members who will fight to protect Social Security. 
One member nominated by Republicans is Rep. Paul Ryan (R-Wisconsin), the ranking minority party member on the House budget committee. Ryan has proposed a re-tread of the Social Security privatization plan first offered by President Bush in 2005, which was soundly rejected by Congress. 
The day after the Obama commission meets, the Peter G. Peterson Foundation is sponsoring a "fiscal summit" looking at the fiscal problems posed by the coming retirement of baby boomers and rising budget pressure from Social Security and Medicare.
Social Security is going to need reform-but we need to preserve the program, not dismantle it. The options are well-known-delaying the eligibility age, changing the COLA formula and increasing taxes. But it's a problem well worth solving. 
Social Security is the most successful and valuable part of our retirement safety net. The program operates with tremendous efficiency, keeps millions of Americans out of poverty and pays an annuity-style benefit at a time when traditional pensions are declining. Perhaps most valuable is the program's automatic annual adjustment of benefits for inflation-a feature you can't find in many retirement benefit programs.
We can afford to keep Social Security going. What we really can't afford to do is lose it. 
Millions of Americans are reinventing retirement, and Mark Miller is helping write the playbook for new career and personal pursuits of a generation. Mark blogs at; contact him with questions and comments at

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