Word: pension
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...Security is quite simply running out of ready cash to get through the 1980s. Right now it is paying out in benefits $17,000 more than it collects in payroll taxes every minute of every hour of every day. At that rate, the trust fund on which 31.6 million pension checks are drawn every month will be nearly empty by July 1, 1983. Social Security checks would have to be held up until additional taxes could be collected, and that could take weeks, during which the elderly, many of whom depend on those checks for most or all of their...
...federal employees to retire early on a civil service pension, work for a few years in a job in private industry, and qualify for a Social Security pension too. But any proposal for such change faces two serious obstacles. Federal employees constitute a significant lobbying force, and included in their numbers are Senators and Congressmen, a group not famous for voting against its self-interest-ever...
...Rewrite benefit formulas. A change in the complex formulas for calculating benefits, in order to give a newly retired worker an initial pension representing a somewhat lower percentage of what he earned in his last years on the job, could produce large long-run savings. It also would return the Social Security system to Roosevelt's idea of basic minimum protection against poverty, and would prod those now working to save more for their retirement. Encouraging savings is a goal that hardly any economist, conservative or liberal, will quarrel with...
...idea that national governments, rather than churches, charities or extended families, might have to concern themselves with helping the old and the disabled is relatively new in history. Imperial Germany in 1889 enacted the first pension plan, financed by equal contributions from employers and employees, largely because Chancellor Otto von Bismarck saw it as a method to wean the masses away from socialism. As he explained candidly: "Whoever has a pension for his old age is far more content and far easier to handle than one who has no such prospect." Similar plans were adopted by most other major industrial...
There is no excuse for complacency, as Munnell also points out, since the prosperity of the '90s will affect only the pension and disability funds. The Medicare fund could be bare by 1990 and draining reserves out of the other two. At least, that is likely if hospital costs keep climbing as rapidly as they have been doing for the past several decades (in March, while the CPI as a whole went down for the first time in 17 years, its medical-care component went right on increasing at a 12% annual rate...