Are the actuarial assumptions behind Social Security’s solvency accurate? Two researchers say no.
In a Sunday New York Times op-ed, researchers Gary King of Harvard and Samir Soneji of Dartmouth argue that the Social Security Administration is using outdated methods to project longevity and therefore understates the system’s shortfall.
The two professors forecast that Social Security’s trust funds will be depleted two years earlier than the government’s current 2033 estimate, meaning there are just 18 years before a program that Americans across the board support and rely on faces a funding crisis.
The issue in a nutshell:
Specifically, King and Soneji say that Social Security relies heavily on actuaries using 1930s-era forecasting methods, but seem to have missed the revolution in big data and employ few statisticians capable of making accurate predictions. The result, they say, is that “more retirees will receive benefits for longer than predicted, supported by the payroll taxes of relatively fewer working adults than projected.”
People in their 30s and 40s should be making strenuous efforts to become financially independent because many government programs may not be able to take care of them when they retire.