Social Security Erika Benitez, Blake Gonsalves, Kyle Goto, Hung Nguyen, & Sophy Om.
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Transcript of Social Security Erika Benitez, Blake Gonsalves, Kyle Goto, Hung Nguyen, & Sophy Om.
Social SecuritySocial Security
Erika Benitez, Blake Gonsalves, Kyle Goto, Hung Nguyen, & Sophy Om
Brief Overview of Social Brief Overview of Social SecuritySecurity Proposed programs prior to Social Security
– Share our Wealth Plan– Townshed Plan– Ham & Eggs– Bigelow Plan– EPIC Plan– General Welfare Federation of America– Technocracy– Social Insurance
History of Social Security How Social Security started 1939 Amendment 1950 Amendment Three programs of Social Security
– Old Age and Survivors Benefit– Disability Insurance– Supplemental Security Income– Qualification of these three programs– Amount of Benefits
Graphical AnalysisGraphical Analysis
The table shows a rough estimate of the benefits you will receive when you are retired. You must have at least 10 years of salary to be eligible for the benefits.
Age Of Retirement
Income 62 65 66 67 68 69 70
Less than $35,000 a
year
$4,786 $5,925 $6,381 $6,837 $7,384 $7,931 $8,478
$35,000 to $55,000 a
year
$7,896 $9,776 $10,528 $11,280 $12,182 $13,085 $13,987
More than $55,000 a year
$11,131 $13,781 $14,841 $15,901 $17,173 $18,445 $19,717
Social Security BenefitsSocial Security Benefits
Maximum Social Security Benefit : Worker Retiring at Full Retirement Age in 2004 is $ 1,825/mo. (age 65 and 4 months, born in 1939)– An individual with wages equal to or larger than $87,000 would
contribute $5,449.80 to the OASDI program in 2004, and the employer would contribute the same amount
All Disabled Workers estimated for 2004 is $861/mo
SSI Benefits for 2004– Individual = $564/mo– Couple = $846/mo
All Benefits are accounted for 2.1% COLA for 2004
HOW ECONOMIC AND DEMOGRAPHIC FACTORS HOW ECONOMIC AND DEMOGRAPHIC FACTORS AFFECT SOCIAL SECURITY'S FINANCESAFFECT SOCIAL SECURITY'S FINANCES
The solvency of Social Security's Old-Age The solvency of Social Security's Old-Age and Survivors Insurance and Disability and Survivors Insurance and Disability Insurance (OASDI) system is determined Insurance (OASDI) system is determined by three sets of factorsby three sets of factors
– DemographicDemographic– EconomicEconomic– PoliticalPolitical
Major Demographic Major Demographic AssumptionsAssumptionsMajor Demographics – Fertility– Immigration–Mortality– Disability
Major Economic AssumptionsMajor Economic Assumptions
–Wage Increases– Consumer Price Index (CPI)– Increases in Real Wages– Interest Rates– Labor Force Participation Rates– Unemployment– GDP Growth
Major Political AssumptionMajor Political Assumption
Laws passed by Congress that define the structure of Social Security taxes andbenefits
Problems with Social SecurityProblems with Social Security
“Ponzi Scheme” – Later “investors”, taxpayers, pay back earlier, retired,
taxpayer benefits.
Consumer Price Index – Overstating the increase in the cost-of-living will
increase the national debt $1 trillion greater in 2008.
Birth rate – With a declining birth rate the number of SS recipients
is increasing
For more info…www.socialsecurity.org
Presidential Candidates BioPresidential Candidates Bio
Three major party candidates:– Bush (Republican)– Kerry (Democrat)– Nader (Green Party)
FOR MORE INFO...
http://www.issues2000.org
Ralph Nader’s PlanRalph Nader’s Plan
Social Security is solid
Fears loss in privatization
Replaces certainty with risk
John Kerry’s PlanJohn Kerry’s Plan
No Privatization No Cutting
Benefits No Extending the
Retirement Age No Solutions?
George W. Bush’s PlanGeorge W. Bush’s Plan
Personal Retirement accounts for young workers
Move to Privatization Raise Retirement Age Reduce Benefits
PrivatizationPrivatization
Personal PropertyPossibility of earning moreMarket never has lost over a 20 year
span
Problems with PrivatizationProblems with Privatization
Corporation cut Certainty replaced
with risk Market crash or
scandal Returns could be
less than the projected 74% loss
Transition cost
Raising Payroll Taxes (Peter Orzag)Raising Payroll Taxes (Peter Orzag)
Raise payroll taxes to 15% by 2072Avoid transaction and commission
costs9% reduction of benefits
Changing Indexes (Greenspan)Changing Indexes (Greenspan)
Use “Chained” CPI4% reduction in benefits over 10
years
Changing expected benefitsChanging expected benefits
Use CPI to calculate expected benefits
41% reduction in benefits for those born in 2002
Our Solution to Social SecurityOur Solution to Social Security
Increase payroll taxes 1% over next 5 years
Buy more time to do further studies into privatization
Going PrivateGoing Private
Privatize early as possible (time is a friend of interest)
Allow an individual to go fully private instead of partial
Gov and SEC work together to find a brokerage house
Must meet certain strict criteriaDetermine type of investments
QuestionsQuestions
Any Questions?