Knight
Well-known Member
If this model is anywhere near becoming a reality. I wonder what politicians are going to be promising in order to get votes.
Coronavirus pandemic could wipe out Social Security 4 years earlier than predicted: Wharton Model
Revenue into Social Security has been steadily declining since the start of the coronavirus pandemic in three primary ways, according to the Wharton Model.
“First, the loss of jobs, especially concentrated among low-wage workers, reduces payroll tax revenues,” its analysis explains. “The size of this effect increases with the length of the recession. Second, lower interest rates reduce the interest income received by the Trust Fund. Third, a prolonged period of low inflation reduces earnings for all workers and, therefore, reduces tax revenue received by the Trust Fund.”
Blunting the impact of the depressed revenue is the reduction of costs to the fund, which have been steadily ballooning throughout the years.
“First, the coronavirus increases mortality rates (skewed towards those of retirement age), which reduces total benefits paid out of the Trust Fund,” the model explained.
Low inflation has also reduced the ‘Cost of Living Adjustment’ (COLA) adjustments made to benefit payments. And lastly, initial benefits claimed at retirement have also been reduced due to a lower earnings history of beneficiaries and a reduction in the Average Wage Index (AWI) that is applied to initial benefits.
Social Security benefits are indexed to the AWI, which is the average wage of each worker each year.
“The smaller AWI reduces benefits even for near retirees who maintain their employment during the pandemic,” the analysis stated.
https://www.yahoo.com/finance/news/...y-4-years-sooner-wharton-model-191101417.html
Seems logical to me if the pandemic would cause reduction in benefits and the deficit climbs with taxes supporting paying for both. Politicians will have to be creative in spinning what seems inevitable to me.
Coronavirus pandemic could wipe out Social Security 4 years earlier than predicted: Wharton Model
Revenue into Social Security has been steadily declining since the start of the coronavirus pandemic in three primary ways, according to the Wharton Model.
“First, the loss of jobs, especially concentrated among low-wage workers, reduces payroll tax revenues,” its analysis explains. “The size of this effect increases with the length of the recession. Second, lower interest rates reduce the interest income received by the Trust Fund. Third, a prolonged period of low inflation reduces earnings for all workers and, therefore, reduces tax revenue received by the Trust Fund.”
Blunting the impact of the depressed revenue is the reduction of costs to the fund, which have been steadily ballooning throughout the years.
“First, the coronavirus increases mortality rates (skewed towards those of retirement age), which reduces total benefits paid out of the Trust Fund,” the model explained.
Low inflation has also reduced the ‘Cost of Living Adjustment’ (COLA) adjustments made to benefit payments. And lastly, initial benefits claimed at retirement have also been reduced due to a lower earnings history of beneficiaries and a reduction in the Average Wage Index (AWI) that is applied to initial benefits.
Social Security benefits are indexed to the AWI, which is the average wage of each worker each year.
“The smaller AWI reduces benefits even for near retirees who maintain their employment during the pandemic,” the analysis stated.
https://www.yahoo.com/finance/news/...y-4-years-sooner-wharton-model-191101417.html
Seems logical to me if the pandemic would cause reduction in benefits and the deficit climbs with taxes supporting paying for both. Politicians will have to be creative in spinning what seems inevitable to me.