From: utzoo!decvax!ucbvax!upstill
Newsgroups: net.misc
Title: Re: S.S. - (nf)
Article-I.D.: ucbvax.762
Posted: Sun Jan 30 22:36:10 1983
Received: Mon Jan 31 04:57:50 1983

    Observing the discussion of Social Security is interesting because
the issue is so dry it's like neutral grey: it brings out everybody's
political point of view.  I'd like to disturb the rhetoric for a moment
with a few observations.  My wife is an actuary, so I have a little
second-hand authority.

    First, it is a perfect misconception that Social Security is a 
pension fund.  It is now and always has been what is known in the trade
as a pay-as-you-go system:  There is no sense of an "account" paid into
by each worker, of vesting AT ALL.  There is a "crisis" right now because
the time-summed excess of revenue over expenses is approaching zero.
Now there are at least three good, solid reasons for this which are 
completely independent of the viability of socialism:

    1) There are now much fewer workers paying into the system in proportion
to the number of people drawing out of the system.  This is in part
attributable to lower birth rates, and in part to:

    2) People are now living much longer than they used to.  If I 
remember right, several decades ago the expected survival of a Social
Security recipient was five years, and it is now twelve.

    3) Indexing Social Security to the Consumer Price Index.  While it
is obviously a good idea to shelter the old/helpless from the ravages of
inflation, there is at least good evidence that  CPI is an inappropriate
index:  its accuracy is disputable, but it also heavily reflects the
cost of housing, which is a cost which we might expect many older people
to have stabilized.  The result of the increases in benefits is that on
the average a worker draws benefits equal to his working contributions 
in less than two years after retirement.

    Them's the facts, folks.  Make of them what you will

Steve
~s Social Security myths