Social Security Reform

Mark Thoma wonders what kind of Social Securit reform is worth supporting:

Economist's View: AARP to Push for Reform Addressing Social Security Solvency: Whether for not a solvency crisis actually exists, it’s looking more and more like the ball is rolling towards reform addressing this issue. According to this report from Des Moines, the AARP has decided to push for reform that addresses long-run solvency and increases retirement savings.

AARP looks to refocus retirement debate, WhoTV, Des Moines, Iowa: The nation's largest group for older Americans wants to refocus the debate over Social Security on the need to keep the retirement system afloat. While much of the debate is over diverting tax money in private savings accounts, the A-A-R-P is using town meetings to discuss solvency. At a news conference in Des Moines today, spokesman Steve Carter says keeping Social Security solvent is essential because it's becoming an increasingly important component of retirement planning, due to some troubling trends. Carter says many private pension plans are eroding, and the overall savings rate is at its lowest point in decades...

With the AARP supporting reform involving solvency provisions, it looks to me like some sort of bill will come forward. Enhancing solvency requires increasing revenues or decreasing benefits. Is it time for the Democrats to coordinate behind a particular solvency plan? The politics of this are difficult. I'm not sure what the best strategy is going forward from here given my perception that the public believes that solvency is a problem and that a reform bill is likely.

Clearly the Democrats should get behind proposals that are good for the country--proposals that restore solvency in a balanced manner, set up automatic adjustments so that Social Security remains in balance, raise national savings, are competently implemented, and preserve the very valuable defined-benefit character of the current program.

A deal that I could easily get behind would:

• Restore expected solvency, half by cutting future benefits and half by raising Social Security taxes.
• Create automatic mechanisms--benefit cuts and tax increases--to keep Social Security in actuarial balance if forecasts deteriorate (and also include benefit increases and tax cuts if we get good news).
• Create attractive and subsidized add-on accounts.
• Restore pay-go and other institutional mechanisms that will make it next to impossible for even an administration as feckless as the Bush administration to raid the Social Security operating surplus again.

Comments

[Jason]

No real problem with your suggestions here. My only concern is regarding the viability of "automatic" benefit cuts or tax increases. Right now, if there is a benefit cut or tax increase to shore up finances, the public knows (or can "easily" determine) the parties responsible: there is some accountability, at least in a very general sense. A *black box* finance mechanism is exactly the kind of set up those farthest out to the right would love to implement, as it could very easily be "gamed" or "tuned" in back-room deals to both raise taxes *and* cut benefits, thus creating public outrage over the entire system. Since "the Formula" would be supposedly impartial, everyone involved could just blame "the system" while taking neither responsibility nor blame. I know I sound paranoid, but I trust the current crop of leaders in this country not one inch farther than I could throw them, and I know the Republican will at least attempt to do the above as a payoff to libertarians and radical conservatives. Is there anyone out there that sincerely believes that this couldn't happen? The opposition is doing exactly the right thing: stall until a better (more honest) administration is voted into office; compromise w/ current clowns in any form will be the end of SS.

[liberal]

Brad DeLong wrote, "...half by raising Social Security taxes..."

While I'm mostly on the "liberal" side of this debate, IMHO the tax on labor in SS taxes is already very high and doesn't need to be made higher. (NB: most economists believe the incidence of the employer half falls mostly on the employee.)

[John K. Taber]

I have a problem with this. Nothing should be done until we know something needs to be done.

Actuarial imbalance is questionable. It is due to a 75 year forecast, which length is ridiculous on its face. One is lucky if one can get a meaningful forecast for five years.

The "solution" to Social Security is political, not accounting or actuarial or administrative. No matter what tricks we enact the Cato Institute and the Concord Coalition will badmouth them. We don't have any choice but to fight for Social Security politically on a continual basis.

John

[Matthew Saroff]

It's unreasonable that Kobe Bryant pays the same dollar amount of SS taxes as I do.

Also: You can't trust the Republicans, they will screw with it in committee.

Here is the prescription:

Eliminate the earnings cap. Do it immediately for income over $1million/year, and phase it in over 5-10 years for $90K to $1M.

Do not vote on anything until that passes without any ryders.

Second, get the consent of the senate to allow a filibuster of the committee report for any followup legislation.

[Dale]

Do nothing. Any attempt to "reform" SS in this environment will turn out to be a disaster.

[kharris]

I have a bit of a problem with the notion of pro-cyclical adjustments to Social Security taxes and benefits. Not only does this seem questionable as macroeconomic policy, but also questionable in terms of retirement planning. If we really want SS to maintain its insurance quality, we need to think about how it fits in with the other legs of the 3-legged retirement stool. Say revenue comes in below target for a 10-year period, triggering a cut in benefits and a hike in taxes. Below target revenue may well result from the economy performing below its potential for much of that ten years. More specifically, it may be because the labor market is not doing all that well. If we begin paring back benefits for those whose best savings years were inhibited by a weak economy or labor market, we are compounding the impact of that weakness for new retirees. Older retirees and future retirees could reasonably be expected to do better on the private part of their retirment portfolio. Those who retire after 10 lean years get less from the public "insurance" part of their portfolio, for a reason that has nothing to do with their own behavior.

Similarly, to the extent that payroll taxes discourage hiring, boosting taxes at a time when hiring may already be weak seems like bad medicine.

If the rest of the budget were responsibily managed, and Social Security maintained a surplus through "neutral" funding periods, to be drawn down in bad times, both the stabilizing effect of the program and the insurance qualities of the program would work better.

[Auros]

Have you read the FT yet today?

http://www.dailykos.com/storyonly/2005/8/3/9948/13038
http://news.ft.com/cms/s/2eb026fc-0374-11da-b54a-00000e2511c8.html

They say our household savings rate is back to being negative...

[anne]

KHarris

'If the rest of the budget were responsibily managed, and Social Security maintained a surplus through "neutral" funding periods, to be drawn down in bad times, both the stabilizing effect of the program and the insurance qualities of the program would work better.'

Absolutely, and perfectly expressed.

[Brian]

Do the benefit cuts need to be as large if the cap on payroll taxes is lifted to $150-200,000? I have no idea of the math concerning this subject, but the "soak the rich" part of me would love to see the wealthy pay a bit more (though not too much) with only minor benefit cuts. Of course, this assumes that immigration remains strong and takes care of the problem.

Also, I like the idea of creating a board that would take administration of the program out of the hands of the Congress. But what's to prevent it from getting stocked with people who want to see it mutate, like Bolton at the U.N. or conservatives at PBS?

[save_the_rustbelt]

"Whether for not a solvency crisis actually exists,..."

Well, a cash flow deficit by 2018 will be a crisis because the general fund will play hell finding the money to pay back the "trust fund bonds."

Be that as it may, it is time to fix the system with benefit cuts and pushing back retirement ages gradually. I say this knowing that my age group, 45 - 54 will probably have to be raped to put the system back into balance. On the day SS says I should retire I will have paid taxes for 51 years, and I figure I will have to be targeted for cuts.

In the longer run, why not combine the ideas of Bill Clinton, Bob Kerrey and George Bush and start, say with with those born 1990 and after, a funded plan. Hire TIAA-CREF or equivilant to run the system, and that gives us a very long time to ramp up.

Very soon public employees will be about the only working Americans with secure retirements, and they have pre-funded systems invested in the evil stock market.

[Cranky Observer]

> Restore expected solvency, half by cutting future
> benefits and half by raising Social Security taxes.

Last time I checked, my taxes were raised around 1989. Substantially. By Mr. Greenspan. And my future benefits were cut, too, in various ways.

Then the Radicals took control, and Mr. Greenspan blessed the spending of my money on various Excellent Adventures. By "Mr. Fiscal Conservative" George W. Bush.

So until I see Grover Norquist castrated and set in the polar bear exhibit at the National Zoo as live prey, please don't ask me to pay more Social Security tax. The next Radical Administration will just spend it anyway.

Cranky

[Mark Sullivan]

Another component of any reform:

remove any legal distinction between the bonds held by the trust fund and the ones held by the market.

Make the bonds held by the trust fund marketable and whatever else it takes. The Republicans will probably be afraid to oppose this reform and it will mean more dramatic hoop jumping if they try to selectively default on the trust fund bond holdings after 2018.

As a side benefit, it may also help Uncle Alan with his little bond price conundrum the next time a Republican politician makes the "they're just IOUs, pieces of paper, we don't have to pay them back" speech.

[Jim]

WHY OH WHY ARE PROGRESSIVES SO WILLING TO CUT WORKER BENEFITS OR RAISE THEIR TAXES?

Just days after Brad presents a damning graph showing how median wages have been dropping for decades, he says he supports raising worker taxes and cutting their benefits! No wonder democrats are in their current position. Why is investment income exempt? Why is there a cap at all? Very disappointing, Brad.

Jim

[bakho]

AARP is just plain nuts to think they can get anything through this administration and this Congress and not sell out the majority of people to the benefit of special interests. Why cut benefits up front? Bad Bad idea. A better idea. Keep benefits the same. If shortfalls appear later, INCREASE TAXES ON BENEFITS- Later. That way, those that need SS most desperately will get full benefits. Those that have adequate sources of other income will have to pay back some SS as taxes to float the system. If circumstances change and that adequate source of other income declines, then SS taxes would decline. This would be more fair that out and out cutting benefits and preserve the INSURANCE nature of SS.

We are in this pickle because Greenspan had the bad idea of "prefunding SS". Now the Republicans want to bait and switch those who have been paying regressive SS taxes for the past several decades by screwing them out of their benefits.

Just say no.

[Carol]

Raise taxes by eliminating the cap, give the employers a credit of some sort for taxes paid on salaries under a certain amount (say under 100K) (ah, you say, why under? so that employers can't yawp about how they can't hire anyone anymore because of the onerous taxes...this would encourage lower level hiring (ha ha ha)). Increase the earned income credit for lower wage employees so that they can afford to work (say under 32 K or whatever the median income is). Tax SS benefits for anyone making over a given amount of income from ALL SOURCES and OF ALL TYPES ( say over 100K in this era)so that in effect the rich get their SS benefits totally taxed away. Hurrah: benefit cuts and increased taxes without pain on the lower classes, and a positive hiring incentive for employers.

[pat]

Count me in the "do nothing" camp -- there isn't an urgent problem and more importantly, you can bet that Bush and company will screw it up more than you can imagine.

In particular, no SS tax hikes, not when it is in surplus! Haven't we learn the lesson from the past 20+ years? (1) The SS trust fund has been used to make both the Reagan and Bush tax cuts look less damaging to budget balance than they actually are; and (2) The trust fund is still in danger of being looted in the "reform" talk, which is not surprising: when there is a pile of money and the owners are remote, it invites looting.

Fundemantally, increasing SS trust fund is not the same as increasing retirement savings. While individually, a bigger savings account means I am better prepared for my retirement, collectively, it is not necessarily true that we as a nation are better prepared for retirment just becuase we all have big retirement savings and SS trust fund are fully funded. I am surprised how many people seem to forget about this aggregation fullacy. Becuase if one understand this, then it should be obvious that there really is no need to make sure SS trust fund is fully funded, our retirement will be provided by the output of people who are working at the time of our retirment, funding methods can not change this hard, demographic fact.

[A Harless]

1. Cutting benefits is better than raising taxes, for the following reason: taxes will come from younger people, who would have saved some of the money; benefits will come from older people, who would have spent nearly all of it. If the low saving rate is really such a big problem, then social security reform should be done in such a way as to increase saving.

2. What is wrong with raiding the surplus, if you have a good Keynesian reason for doing so? God help us if the Treasury had had a balanced budget in 2003! If Bush hadn't raided the surplus and then some, we'd be selling apples on the street corner.

[ken melvin]

Surely if sales tax is acceptable a prorata tax on all income must also be acceptable.

[save_the_rustbelt]

nmg

I doubt the Professor scrubbed your comment, he is quite willing to post varied opinions.

For some reason this site is not working at its usual efficiency, slow sometimes and eats attempted posts occasionally.

[Cranky Observer]

> What is wrong with raiding the surplus, if you have a
> good Keynesian reason for doing so?

The Keynesian stimulative effect of pouring $300 billion/year down a sewer pipe in Iraq (minimum; I suspect DoD is hiding another $300 billion/year of costs elsewhere) is what exactly? Other than Humvee armour mfgrs and blood plasma supply companies, I am not seeing much positive there.

Cranky

[Bruce Webb]

Where do I sign up? Especially with the second half of this:
"Create automatic mechanisms--benefit cuts and tax increases--to keep Social Security in actuarial balance if forecasts deteriorate (and also include benefit increases and tax cuts if we get good news)."

The current payroll gap is 1.89% so half of that would be a tax increase of .945% or $378 dollars a year for the earner making $40,000. That works out to $1.03 a day.

Currently the system is on course to pay out 76% of scheduled benefits without changes. Presumedly this .945% backfills some of that and maybe we have a system that can pay out say 88% of scheduled benefits.

We implement this plan and present the numbers openly and people are going to ask "Is that all it takes? They have been scaring me to death over $1.03 a day?"

The beauty if that it is totally unneeded. Save the Rustbelts' 2018 is based on Intermediate Cost economic assumptions, and they are frankly pessimistic rubbish. Productivity is not going to come in at 2.0% for 2005, at this point it can't, we are this close or perhaps beyond that amount of growth already. And small changes in the short term numbers have outsize impacts on long term results. For example fully funded (no changes in benefits, retirement age, or payroll tax) Low Cost only calls for 2.1% productivity in 2005. Needless to say we will hit that number as well.

Given ordinary economic growth going forward Social Security is currently overfunded. This can be seen by inspecting the following table and then examining the economic numbers in the Reports:
http://www.epinet.org/content.cfm/issueguides_socialsecurity_changes
Depletion has been getting pushed off into the future at an average of 1.3 years per year, shortfall has been moving forward slower but at .75 years per year that number too is receding into the future. And during this whole period the Trustees have been grinding down the economic numbers to make them more pessimistic.

The is a word for a problem that left unaddressed, and which is tasked with ever more gloomy projections, still recedes into the future at more than a year per year. And boy it isn't "crisis".

Brad's plan would have us ratchet down taxes and boost benefits every year we beat the projections. And they are so ridiculously low that we would have that $1.03 a day back in no time. Which is good because you know they are going to hold on to every penny of that 12.4% otherwise and this may be the only way to get the payroll tax on a glidepath downwards, which oddly enough is where it belongs.

I can hear eye-rolling across the country. Perhaps doubters could ask themselves when was the last time they actually consulted the Social Security Annual Report first hand? Because every line in this Flash is spot on:
http://www.rockthevote.com/socialsecurity/getitstraight.php

[Bruce Webb]

1.89% was the payroll gap in the 2004 Report. The 2005 now puts it at 1.92%. Which doesn't change the fundamental argument. It just moves the per day cost for the $40,000 earner to $1.05.

Just wanted to add my 2 cents.

[kharris]

The WSJ today reports on the impact on real estate costs of hedge funds clustering in Greenwich. In the course of the article, the earned income of several hedge fund managers is cited. Just lifting the cap in Greenwich could clear up this whole problem.

[Dubblblind]

I am happy to see so many in this thread giving the thumbs down for any attempt to make a change to SS at this point no matter what the merits. This is just not the time or the administration for it, period. And Brad I know you know better. The malevolence of the Bush administration was almost put to rest on this issue, I can't believe AARP, or anyone else for that matter, is so foolish as to want to keep it alive at this point. Only bad things will come of it. Sheesh.

[anne]

Sheesh is right. Why ever are we thinking of solving a problem of decades in the future when we do not know there will be a problem and there likely will not be? Social Security is fine, and there are ever so many other needs to look to. Delay the issue a few months, then it will be an election year and the issue will be set off another year, then we will have aged some and there will be a more powerful defense of Social Security than now. Change nothing.

[save_the_rustbelt]

"The beauty if that it is totally unneeded. Save the Rustbelts' 2018 is based on Intermediate Cost economic assumptions, and they are frankly pessimistic rubbish."

Bruce:

So increased productivity is going to save SS?

All this reminds me of an account's definition of an economist.

"An economist is a very smart person who writes a check and then assumes there is money in the account."

Given the federal government's track record on financial management assuming adequate cash flow is really dangerous. I don;t want to crush the financial future of my children and grandchildren.

If we overreact now we can always unwind the changes. If we do not react now time is our enemy.

[pebird]

feckless = dishonest?

[pebird]

FWIW:

I think this is less of a numbers game than a realization that productivity and wages are becoming increasingly disassociated. This would mean that the 50 - 50 split between workers and employers would have to shift - big change.

This is really about who has a claim on the increase in productivity.

[bncthor]

Jim asks ..."Why is there a cap at all? " This a very good question. If the present FICA tax applied to all wages and salaries paid to workers, including all management employees and consultants, would there then be a social security solvency problem?

[Big Al]

And as a receipient of SS, I am concerned how the Inflation Index is gamed, in order to reduce my pension.

[lise]

Time is indeed not our "enemy." There will be no problem making changes if needed in 2 or 5 or 10 years. The reason for the push against Social Security now is to use Administration influence to end the New Deal Social Security legacy. As the country ages this will be impossible. No change is necessary.

[lise]

Big Al

We should be very concerned with any attempt to change indexing, for any such change will be designed to limit benefits. Also, we should limit the extent to which cost increases for Medicare are taken from Social Security.

[save_the_rustbelt]

"Jim asks ..."Why is there a cap at all? " This a very good question. If the present FICA tax applied to all wages and salaries paid to workers, including all management employees and consultants, would there then be a social security solvency problem?"

FDR, the high preist of Social Security, waas very careful to create a system with wide political support (the original Commission reports are interesting reading).

If all income is taxable yet benefits are capped there is less reason for some people to support the program.

Curiously, the people who claim to worship FDR seem to know the least about his rationale for the program design.

[bncthor]

save_the_rustbelt ..."If all income is taxable yet benetits are capped there is less reason for some people to support the program." In my previous comments, I did not advocate applying FICA taxes to all income - just to all wages and salaries - labor income. This would largely the social security solvency problem -to the extent that such a problem exists. All non-wage income would still be free from FICA taxes.

[bncthor]

Sorry - I meant to say largely solve...

[save_the_rustbelt]

bncthor

and I did mean wage income, not "all income"

(although to be technically correct wage income does include some partnership income, etc.)

[rod]

prediction: there will be a law. it will be a bad law. those of you who say that some law might be good will have enabled this law to pass. it will work out dreadfully badly for America. you will forget that you helped make it possible.

[Hedley Lamarr]

My understanding is that there is considerable doubt whether anything needs doing. Once you cut benefits or raise the retirement age now, we will be unlikely to reverse the process upon finding out later that there was in fact no problem.

[Bruce Webb]

"So increased productivity is going to save SS?"

Well unless you can give me good reasons to simply ignore Low Cost's economic assumptions as laid out in Table V.B1 and their computed outcomes as graphically depicted in Figure II.B7 then I would answer "Yes". Because the Trustees of Social Security, including three Bush Cabinet Secretaries signed a Report that asserted that if we hit the numbers of Low Cost we were home free. You don't like those numbers then take it up with the Secretaries of Treasury, HHS and Labor. They are all Trustees and they endorsed Low Cost and it has every bit the backing that your 2018 date has, it comes from the exact same Tables and Figures.

http://bruceweb.blogspot.com/2004/11/what-is-low-cost-alternative-what-does.html

In the final analysis you have been played, wittingly or not anyone using dates and figures derived from Intermediate Cost is a simple dupe of privatizers who have a not-so-hidden agenda of phasing out Social Security. Sad but true.
http://www.rockthevote.com/socialsecurity/getitstraight.php

Get it Straight indeed. If you haven't read the Reports for yourself, if you are repeating figures you learned third hand, you have been Played.

[Bruce Webb]

Figure II.D7 http://www.ssa.gov/OACT/TR/TR05/II_project.html#wp106217
You may need to scroll down to the bottom of the page.

[liberal]

pebird wrote, "This would mean that the 50 - 50 split between workers and employers would have to shift - big change."

It's irrelevant who actually remits the tax. What's relevant is the "incidence" of the tax, which depends on the elasticities of the supply of and demand for labor.

Most economists think that, regardless of who pays for it, most of the SS tax falls on the worker, not the employer.

[liberal]

Brian wrote, "I have no idea of the math concerning this subject, but the 'soak the rich' part of me would love to see the wealthy pay a bit more (though not too much) with only minor benefit cuts."

But a lot of the people you're referring to aren't all that rich. Remember, "rich" depends on assets, not income. A lot of those folks are perhaps in the lower echelons of the upper class, but they're hardly "rich".

And if we want to soak the rich, why tax only labor income? Why not capital income? For that matter, why tax income and not wealth?

[liberal]

save_the_rustbelt wrote, "Well, a cash flow deficit by 2018 will be a crisis because the general fund will play hell finding the money to pay back the 'trust fund bonds.' "

That's the general funds' problem, not SS's.

"Be that as it may, it is time to fix the system with benefit cuts and pushing back retirement ages gradually."

Easy to say for someone like me who has a desk job; not so easy for someone who's worked with his hands, back, etc, all his life. What's _your_ occupation?

[liberal]

Mark Sullivan wrote, "remove any legal distinction between the bonds held by the trust fund and the ones held by the market.

"Make the bonds held by the trust fund marketable and whatever else it takes. The Republicans will probably be afraid to oppose this reform and it will mean more dramatic hoop jumping if they try to selectively default on the trust fund bond holdings after 2018."

Chief legal distinction here isn't marketability. It's property interest. The Republicans don't have to formally default on the obligations held by the SS Trust Fund, after all; they can just keep rolling the debt over using SS inflows; cut benefits drastically while changing the statutes governing what the IOUs in the SS TF are for; etc.

[save_the_rustbelt]

liberal:

CPA and consultant

There is no reason for drastic benefit cuts, and no reason for major tax increases. I'm in favor of gradual phased changes now rather than the big gulp of bitter medicine later.

I recognize that many people physically need to retire at 62 - 65 but we have already phased the retirement age to 67. Some intelligent changes to the disability program and to Medicare eligibility could cover much of the problem.

I think we need an entirely new system for those 21 and under and that would give up 50+ years to make that transition - that would require leadership, however.

[save_the_rustbelt]

Bruce:

Yes, I have read the reports,

NO, I don't trust the cabinet Secretaries or anyone else connected to the government.

According to the government, there is a "trust fund" with $1.8 B in it, which is a crock, so why should I belive anything else?

I am pretty well versed in demogrographics, tax policy and good old cash flow, and I don't want my children and grandchildren buried under a dysfunctional mess.

Liberal:

"That's the general funds' problem, not SS's."

So does the General Fund get money from the Easter Bunny, or from taxpayers (who already paid the taxes once).

This is akin to a robbery victim being ordered to restitution to himself.

We baby boomers have no right to dump this mess on our children and grandchildren.

[Bruce Webb]

But rustbelt you deploy dates and numbers like "2018" that have exactly no other authority than the Trustees. Where do you think those numbers come from?

You don't get to deploy 2018 (now 2017) without defending the economic projections that underly them. Defend the numbers of Intermediate Cost or abandon all dates that derive from that model. It's not that hard, at least conceptionally.

There is this odd notion that these dates and numbers have some independent existence outside the Reports of the Trustees of Social Security. They don't.

"According to the government, there is a "trust fund" with $1.8 B in it, which is a crock, so why should I belive anything else?"

But you have bought into 2018 which has exactly zero backing apart from that same "government" "which is a crock".

There are not two sets of numbers, one known to you and one deployed by the crock-meisters. It is all one set of numbers. You've been played.

http://www.rockthevote.com/socialsecurity/getitstraight.php Social Security: Don't get played

[Andy Lang]

I'm a retired pension and medical care actuary (the latter earlier in my career)--and am writing a book on the subject of how to fix both Social Security (SS)and medical care.

SS is easy.

Medical care (MC)is tougher, but needs the same financial underpinnings as SS, assuming we want a stable and afordable health care system.

We need a national medical care system too,in order to do this, and surprisingly, the savings from this alone--200 billion per year--should enough to actuarially advance fund both systems. But if it is not enough, there are at least two other major areas we can tap to get more.

In fact those last two areas should be done anyway, in order to substantially reduce the national deficit and reduce the future deficits, which, if left alone will cripple even America. (How does a 14 trillion dollar national deficit sound to you fellows?)

***

Both SS and MC need a process called Actuarial Advance Funding, and within that process, a specific Actuarial Cost Method called Entry Age Normal.

The overall financial idea is simple--the specifics very difficult and complex, actuarial in nature.

The simple idea is that monies are set aside each year, long before it is needed to be paid out, such that some of this money can be invested long term (once the short term cash outflow needs of the system are taken account of) so that the money plus the investment returns earned thereon, will exactly pay the promised benefits.

Done right, more than two-thirds of the promised benefit dollars can be paid from investment returns. As it stands now, under the dumb PayGo system of financing, less than 10 cents of every benefit dollar will be paid for from investment returns--not anywhere close to enough.

The whole idea is to use an approach that is rigorous, systematic, and self-correcting-- much like ships used sextants to cross gerat oceans in days gone by--not in a straight-line but zig-zag, but eventually reaching the destination.

That approach is broadly called Actuarial Advance Funding (been around for 150 years), while the specific way is the Entry Age Normal Cost Actuarial Cost Method--far and away the best of the six permitted IRS funding methods for private defined benefit pension plans.

Congress and you guys began screwing around with these rules back in the 80's and it is nearly a wreck at the moment.

Thought you would like to know this--that help is on the way--at least for SS and MC.

It may well be too little, too late for private systems, though.

They may well have passed the point-of-no-return, although I am helping to reform funding as we speak. All pro-bono, by the way.