Should You Be Counting on the Social Security Trust Fund?

Posted on September 19, 2012 in Labor, Employment, & Workforce Development by Ann Hollingshead

In a recent post on the AGEnda blog and in the Huffington Post, Dr. Kevin Cahill addresses the viability and real economic assets of the Social Security Trust Fund.

Dr. Kevin E. Cahill today published the piece "Should You Be Counting on the Social Security Trust Fund?" on the AGEnda blog, alongside his coauthor Dr. Gene Kovacs, a Vice President at Analysis Group, Inc. The AGEnda blog is a publication of the Sloan Center on Aging and Work. The article reads:

The three pillars of retirement income – Social Security, private pensions, and savings – are shaky these days.

The Trustees of the Social Security program report that, as of 2033, the trust fund will run dry and system revenues will not be sufficient to pay 100 percent of promised benefits under current law.
Traditional defined-benefit plans — ones that pay predetermined monthly benefits throughout retirement — have been largely usurped by 401(k) plans, leaving individuals exposed to investment risk and, for those who do not convert to annuities, longevity risk.
Savings offer no real buffer either, because the typical older household has less than $100,000 in non-pension, non-housing assets— hardly sufficient to support 20 years of leisure later in life. Today, one in three older Americans relies not on savings but on Social Security benefits for the bulk (80 percent or more) of their family income.

Given the status of these traditional sources of retirement income and the precarious prospects for the future, most of us are going to need to work beyond traditional retirement ages if we want to mitigate any loss in our standard of living.

Maybe that’s not news to you. Well, get ready: the situation is even bleaker.

The rest of the blog post is available here. The Huffington Post also published the article.

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Dr. Kevin E. Cahill specializes in the economics of aging, labor and health economics, and statistical methods. He is a senior economist and the managing director of ECONorthwest's new office in Boise, Idaho. Read more about ECONorthwest's expanding presence in Idaho.