So how are they going to explain
this to their chief voting block age group.
Young workers can retire richer by investing Social Security taxes in private accounts, and people older than 55 will feel no impact from changes, President Bush has said. But in between, a generation faces a future that is likely to be less secure under his plan.
Workers now in their 40s would suffer the deepest cuts in guaranteed retirement benefits payable under current law. At the same time, they have the least chance to recoup reductions by investing in stocks and bonds.
The effect of Bush's evolving plan for Social Security would depend largely on market returns -- a variable that has swung widely in recent years. But in all except best-case scenarios, 40-somethings would fare worse than if Congress did nothing at all, according to an analysis by The Oregonian newspaper of Portland, Ore. The analysis was developed with suggestions from the Social Security Administration's top actuary as well as policy research groups such as the Center for Economic and Policy Research and the Heritage Foundation.
So in all but the best case scenarios, people in their forties fare worse. Again I have to ask, what are they thinking? From a political stand point this is insanity. Other than fifty year olds who will mostly have their benefits guaranteed, who is more concerned about their retirement than people in their forties. Forty year olds are the Republicans most reliable voting block. If word of this ever reaches the street, it would be disasterous for the Republicans.
I wondor what Santorum would think of this?
People in their 40s already have felt the brunt of Social Security changes. Many began working just as higher payroll taxes took effect under President Reagan in 1984. And those born after 1959 will be the first retirees who must wait until age 67 for full benefits.
Now these workers might have to navigate the crosscurrents of Bush's plan. They face significant cuts in guaranteed benefits Bush needs to assure long-term solvency for Social Security, yet they have relatively few years before retirement to build private accounts.
Arriving late in the post-World War II baby boom, children of the late 1950s and early 1960s were raised well beyond the shadow of depression and war. As a result, observers said, Americans now in their 40s may have felt less pressure than preceding generations did to plan for their financial security in old age.
...When Bush has talked about solutions, he has focused largely on the promise of gains through private accounts. But allies and critics alike expect that Bush also will have to scale back guaranteed benefits by tying them to increases in prices rather than wages.
The Oregonian examined both aspects of Bush's plan to reform Social Security -- cuts in guaranteed benefits and creation of private accounts -- to determine the net effect on retirees. It focused on three variables: age, rate of return and income.
The analysis began with data from the Social Security Administration and the agency's projection that it can pay 100 percent of scheduled benefits until 2042.
Although some details of Bush's plan remain unknown -- such as the year changes would begin and the range of investment options -- the analysis led to several broad conclusions about the effect of changes on individual retirees. Among them:
-- Age is the most important factor. Workers now ages 40 to 49 opening accounts in 2009 and earning the historic rate of 4.6 percent per year after inflation and fees would net about 93 percent of benefits payable under current law. By comparison, workers ages 50 to 55 would receive 97 percent. Those in their 30s would get 107 percent.
-- Workers in their 40s would need sustained above-average gains to recoup all benefits payable under current law. A real gain of 7 percent per year on private accounts still would leave most with lower benefits than if Congress took no action.
-- Income has relatively little bearing on how individuals would fare under changes. Workers in their 40s who are paid twice the national average wage and those paid half the average would lose approximately the same share of benefits as those paid the average wage.
Yep, can't understand why the AARP would be against this.
Mr. Bush?
"I don't think anybody has anything to worry about," Bush said in a February meeting with newspaper reporters. "What they ought to be worried about is Congress not doing anything, because the problem becomes very severe in a quick period of time."
Right.