1. Social Security Origins: –New Deal Contributors: –Employee: 6.2% –Employer: 6.2% –Taxable Maximum: $90,000 –Contribute for 10 years to receive benefits

2. Social Security Recipients: –62.8%: Retired –18.4%: Survivor Benefits –13%: Disabled –5.8%: Non-working spouses

3. Social Security Trust Fund Surplus goes into trust fund 2005: 1.7 trillion in trust fund –$155 billion added in 2005 Govt borrows $150 billion a year (IOUs in Fund) PROBLEMS Baby Boomers Living longer Fewer Child Births

4. Americans are living longer and having fewer children Consequently, fewer workers are available to support each Social Security recipient 1960: 5.1 to 1 Today: 3.3 to 1 2040: 2.1 to 1 Source: Social Security Administration, April 2007

5. Benefits promised far exceed dedicated tax revenues Source: Social Security Trustees’ Report—April 2007 (Intermediate Projections) Social Security Outlays Payroll Tax & Taxation of Benefits Percent of Taxable Payroll Calendar Year Social Security Cash Deficits

6. Problems 2017: Payouts exceed income –Need to tap into Trust Fund –Govt. borrows $150 billion a year 2041/2052: Trust Fund Depleted –Annual collections only pay for 74% of benefits

7. Proposed Solutions Raise Max. level from $90,000 to $140,000. –Lower shortfall by 43% Raise tax by ½ %. –Lower shortfall by 24% Raise Age for benefits from 67 to 70. –Lower shortfall by 38% Reduce Benefits by 5% –Lower shortfall by 26% Lower benefits for high-wage workers. –Lower shortfall by 11% Put estate tax into SS Fund. –Lower shortfall by 25% www.aarp.org