Five Facts on Social Security
by
Pat Toomey

1. Fifty years ago, there were 16 workers for each retiree. Today, the number is just over three. In 25 years, it will be about two. And that assumes medical advances will not boost life expectancy. With the growing number of retirees, Social Security’s Board of Trustees says program costs “will increase rapidly” during the next 25 years.

2. In just five years, the system’s temporary cash-flow surplus starts to shrink. Just nine years later, the payroll taxes that are supposed to fund benefit payments no longer will suffice.

3. Social Security’s trustees estimate that eliminating the shortfall to perpetuity, between promised benefit payments and the payroll taxes, would require more than $10 trillion in today’s dollars. That’s more than double the publicly held national debt. It’s enough to buy four of every five owner-occupied homes in America.

4. The rates of return young workers will get on the money they contribute are so low that any private system offering a similar deal probably would be banned. The average 30-year-old worker is promised a return of only about 2%! But Social Security cannot honor even that meager promise. Based on current projections, Congress will have to cut promised benefits by about 27% when the current thirtysomethings retire.

5. The unwillingness of politicians to address this looming disaster and support personal savings accounts has perhaps been the greatest Social Security crisis to date. As the trustees warn, “The projected trust fund deficits should be addressed in a timely way…The sooner adjustments are made, the smaller and less abrupt they will have to be.” Fortunately, President Bush has risen to this challenge. Let’s hope Congress follows.