A Different View on the Importance of Social Security’s Solvency Issue - RealClearMarkets; AMAC

RealClearMarkets’ editor John Tamny, in a post on their website, offers an opinion on the urgency of Social Security’s insolvency problem that differs substantially from many seen in financial media. In his post, he observes that the absence of demonstrated panic among a specific population cohort–specifically those not yet receiving Social Security benefits–may indicate that there’s “… no Social Security funding crisis.”

Tamny offers conjecture on the diminished alarm over Social Security’s financial plight, suggesting that the growth in “… market-based retirement plans of the 401(k) variety” and the creation of private wealth are contributing factors leading to a lessening interest in government’s role in providing for financial stability in retirement. He goes on to suggest that the importance of Social Security to retirees has lessened over time as workers tend to extend their time in the workforce, challenging the age 62 to 70 claiming range as being outdated. Read the Tamny post here.

While the rise in private wealth creation might be a factor in the future of younger workers, and while it might contribute to the lack of concern about Social Security’s insolvency now less than a decade away, it needs to be reconciled against a finding by the Federal Reserve’s Survey of Consumer Finances (SCF) asserting that “… almost half of American households had no savings in retirement accounts.” For those within several decades of retirement, the availability of a sustained Social Security benefit program could likely be more of a factor than for those just entering the workforce. Consequently, attention still needs to be focused on stabilizing the program’s finances while other sources of retirement income develop. Toward this end, Congress needs to continue to seek resolution to the funding problems as they currently exist.

As an example of the leading thoughts on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized.  This can be achieved without payroll tax increases through modifications to various areas of the benefit calculation process.  AMAC Action, AMAC’s advocacy arm, supports, among other measures an increase in the threshold where benefits are taxed and then indexed for inflation, and calls for eliminating the reduction in people’s benefits for those choosing to work before full retirement age.  AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade. To learn more about AMAC’s approach to resolving Social Security’s dilemma, click here.

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