Winehole23
05-12-2009, 06:09 PM
Kiss Retiring At 67 Goodbye (http://www.forbes.com/2009/05/12/social-security-taxes-business-washington-retirement.html)
Joshua Zumbrun (http://search.forbes.com/search/colArchiveSearch?author=joshua+and+zumbrun&aname=Joshua+Zumbrun), 05.12.09, 06:08 PM EDT The recession is depleting the Social Security trust fund faster than expected, increasing the odds that the retirement age will be raised.
WASHINGTON, D.C. -- Social Security (http://topics.forbes.com/Social%20Security), long growing unsustainably, is now in even worse shape because of the recession.
In its annual report Tuesday, the Social Security Board of Trustees projected that by 2016 Social Security will pay more in benefits than it collects in taxes. Prior to the recession, the system would have stayed in the black until 2017. Tuesday's report also said the Social Security trust fund will be exhausted in 2037, four years earlier than the estimate a year ago.
The simplest solution looks to be delaying when workers can tap Social Security, which would be another blow to Americans who were already facing the prospect of having to spend more years in the traces due to the evaporation of home equity and retirement savings amid the downturn.
In 2008, when home prices (http://topics.forbes.com/home%20prices) had been falling for two years in most parts of the country but before the stock market crashed, the AARP conducted a survey that found around one in five people ages 55 to 64 were delaying retirement for economic reasons. One in four people ages 45 to 54 were also expecting to retire later.
The stock market crash in October made the problem even worse. The Center for Retirement Research at Boston College (http://topics.forbes.com/Boston%20College) estimates that from Oct. 9, 2007, to Oct. 9, 2008, (when the Dow and S&P 500 were at about the same level as they are today) the value of equity in retirement plans lost about $4 trillion. For pension plans, it means many of them are now badly underfunded. For 401(k)s and IRAs, it means a huge loss of retirement savings.
According to Tuesday's report, in 2016, Social Security will no longer collect enough revenues to pay its benefits. The Social Security trust fund that the government accounts for is lent out to other parts of the government. The trust fund is, really, just a claim on future tax revenues (http://topics.forbes.com/tax%20revenues).
Michael Astrue, the commissioner of Social Security, says, "We should be neither casual nor hysterical about the revised insolvency dates. As with the economy as a whole, the Social Security system will weather this recession. However, the sooner we get on with the task of reforming the system, the easier it will be to make the tough choices that we all know we need to make."
Social Security is sometimes considered untouchable--too politically toxic to meddle with. However, Tuesday's report projects that the system will hit a crisis point during Obama's second term, if he is re-elected.
This is no longer another president's problem. In releasing the report, Treasury Secretary Tim Geithner said, "The president explicitly rejects the notion that Social Security is an untouchable politically and instead believes there is opportunity for a new consensus on Social Security reform."
Joshua Zumbrun (http://search.forbes.com/search/colArchiveSearch?author=joshua+and+zumbrun&aname=Joshua+Zumbrun), 05.12.09, 06:08 PM EDT The recession is depleting the Social Security trust fund faster than expected, increasing the odds that the retirement age will be raised.
WASHINGTON, D.C. -- Social Security (http://topics.forbes.com/Social%20Security), long growing unsustainably, is now in even worse shape because of the recession.
In its annual report Tuesday, the Social Security Board of Trustees projected that by 2016 Social Security will pay more in benefits than it collects in taxes. Prior to the recession, the system would have stayed in the black until 2017. Tuesday's report also said the Social Security trust fund will be exhausted in 2037, four years earlier than the estimate a year ago.
The simplest solution looks to be delaying when workers can tap Social Security, which would be another blow to Americans who were already facing the prospect of having to spend more years in the traces due to the evaporation of home equity and retirement savings amid the downturn.
In 2008, when home prices (http://topics.forbes.com/home%20prices) had been falling for two years in most parts of the country but before the stock market crashed, the AARP conducted a survey that found around one in five people ages 55 to 64 were delaying retirement for economic reasons. One in four people ages 45 to 54 were also expecting to retire later.
The stock market crash in October made the problem even worse. The Center for Retirement Research at Boston College (http://topics.forbes.com/Boston%20College) estimates that from Oct. 9, 2007, to Oct. 9, 2008, (when the Dow and S&P 500 were at about the same level as they are today) the value of equity in retirement plans lost about $4 trillion. For pension plans, it means many of them are now badly underfunded. For 401(k)s and IRAs, it means a huge loss of retirement savings.
According to Tuesday's report, in 2016, Social Security will no longer collect enough revenues to pay its benefits. The Social Security trust fund that the government accounts for is lent out to other parts of the government. The trust fund is, really, just a claim on future tax revenues (http://topics.forbes.com/tax%20revenues).
Michael Astrue, the commissioner of Social Security, says, "We should be neither casual nor hysterical about the revised insolvency dates. As with the economy as a whole, the Social Security system will weather this recession. However, the sooner we get on with the task of reforming the system, the easier it will be to make the tough choices that we all know we need to make."
Social Security is sometimes considered untouchable--too politically toxic to meddle with. However, Tuesday's report projects that the system will hit a crisis point during Obama's second term, if he is re-elected.
This is no longer another president's problem. In releasing the report, Treasury Secretary Tim Geithner said, "The president explicitly rejects the notion that Social Security is an untouchable politically and instead believes there is opportunity for a new consensus on Social Security reform."