How long would the Social Security trust funds last if they earned an average interest rate of 8%, 9%, or 10%?
A higher interest rate would extend the life of the trust funds. The 1998 report of the Social Security trustees illustrates how a higher interest rate would reduce the long- term deficit–which is 2.19 percent of taxable payroll under their “best estimate” scenario. That scenario assumes that the long-term interest rate is 2.8 percent higher than inflation (or 6.3 percent total.) If they assume a higher interest rate–3.5 percent higher than inflation (or 7% total)– the deficit would be reduced by about one fifth. (It would drop from 2.19 percent to 1.72 percent of payroll. 3.6 What about those of us in the younger generation who want to plan for our retirement but are penalized for our attempts to save? How can we benefit from a system that in all reality will not give me the return for what I put in? One of the major objectives of reform is to assure young workers a fair and equitable Social Security system when they need it as a result of disability, death (survivors benefits for
Related Questions
- What is the interest rate on trust fund investments that was used to make the projection on how long the Social Security trust funds would last?
- COULD REVISING THE SOCIAL SECURITY TRUST FUNDS INVESTMENT POLICIES PROVIDE MORE RESOURCES FOR THE RETIREMENT OF THE BABY BOOMERS?
- How long would the Social Security trust funds last if they earned an average interest rate of 8%, 9%, or 10%?
