Maine Politics

From the Piscataqua to the St. John

Sunday, February 27, 2005

Social Security Math

UMaine Political Science professor Amy Fried explains the math behind the Social Security Trustees' estimate that benefits will have to be decreased in 2042.
How good is the trustees' assumption? It's clear that these are very low economic growth assumptions. As conservative columnist George Will has pointed out, the assumed 1.8 percent growth rate is half the average growth rate since the Civil War.

And the trustees do not have a good track record. Their prediction for when Social Security will have insufficient funds keeps getting moved forward, from a prediction of 2029 in 1994, to 2034 in 1999, and now to 2042. If economic growth is only a little higher than what the trustees assume, in 2042 Social Security will have little or no problem fully paying retirees.

In fact, if the economy grows just 1 percent faster each year than the trustees predict, there will be no problem covering Social Security costs until at least the end of this century.

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