The American Institute of Certified Public Accountants (AICPA) released this week a comprehensive analysis of the factors that should be considered for Social Security reform. The intent of this publication is to provide a tool that will aid in this important debate.
The goal of the report is to provide unbiased facts on the degree of the Social Security program’s financial problem and the impacts on the economy and society. In this report, developed by numerous economic, tax and accounting experts at the AICPA who have been examining this issue, the AICPA urges that before anyone takes a specific position on the issue, that policymakers and the public need to gain an ongoing and clear understanding of the economic and social ramifications affecting Social Security reform. CPAs are trained and qualified to evaluate facts and figures and offer to the public an objective perspective to what is an important and emotional debate.
Tom Ochsenschlager, AICPA Vice President – Taxation said, “The debate surrounding Social Security reform brings to the forefront philosophical differences, varying opinions, and the age old trade-offs between fairness, simplicity, economic growth and social policy. We at the AICPA strongly urge policymakers and the public to thoroughly understand the issues surrounding Social Security reform before taking a position.”
The catalyst for the Institute’s report is the Social Security Administration’s estimate that the Social Security Trust Fund balance will peak in 2028 and be exhausted by 2041. Benefits will then be limited to the then current cash flow into the system. Current actuarial calculations indicate that the Trust Fund will need an additional $3.5 trillion to pay anticipated future benefits over the next 75 years.
The report, available electronically, covers the following issues:
- The current financial condition of Social Security
- The relationship between Social Security and the elderly living in poverty
- The redistribution of income inherent in the current system and how changes might affect that in the future
- How changes to the current system might affect decisions about when to retire, the amount of work performed in retirement and personal savings rates
- The tradeoff between additional risk and higher rates of return
- Potential issues related to transition funding
The report addresses many of the current reform proposals and explores the benefits and drawbacks of each.
“The viability of the Social Security system affects the futures of most Americans,” said Ochsenschlager. “Therefore it is most important that changes be made carefully and with a thorough analysis of the issues. We believe our study adds that knowledge to the debate.”