MORE SOCIAL SECURITY DOOM-MONGERING….Over at Slate, Will Saletan has yet another entry in one of journalism’s favorite genres: the Social Security doomsday story. It’s chock full of the usual grim statistics: we’re living longer, we’re retiring earlier, there are fewer workers to support each retiree, and the taxes to keep up with all this are going to bankrupt us before long. In short, we’re completely screwed.
Please. Can we just stop with this stuff? The financial projections for Social Security really aren’t that complicated, and the Social Security trustees take into account all the stuff that Saletan mentions. They know perfectly well that lifespans are increasing and they include that in their models ? along with a dozen other trends that Saletan doesn’t mention. And it turns out that the results aren’t really very scary at all.
Here’s the deal in three easy steps:
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Currently, federal government spending amounts to about 20% of GDP.
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Every year, the Social Security trustees make three projections for the future growth of benefits. The middle projection indicates that everything is fine until about 2042, after which we will need to increase taxes by ? wait for it ? a whopping 2% of GDP.
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However, it turns out that the middle projection hasn’t turned out to be the most accurate in the past. The “low cost” projection has. And that projection tells us that Social Security is solvent for at least the next 80 years.
So: even if you’re the worrying sort, the pessimistic scenario suggests that we’ll need to do no more than gradually increase taxes by about one-tenth starting in a couple of decades. Or perhaps by a twentieth along with a few modest benefit reductions. Not exactly the end of the world. But the most likely scenario is that Social Security is in fine shape and we don’t have to do anything at all.
Saletan is right that we can all look forward to longer retirements than our great-grandparents enjoyed. And guess what? There’s nothing wrong with that. We’re a richer country than we were in 1935 and we can afford it. There are plenty of things to worry about these days, but Social Security isn’t one of them. Honest.