HOUSE_OVERSIGHT_020974.jpg

Restructure Social Security: Policy Options From Report of the National Commission on Fiscal Responsibility and Reform

Policy Options
Future Social Security Deficit Reduction¹
Gradually reduce future benefit payments to high earners while increasing them for low earners by 2050
37%
Gradually increase taxable maximum to 90% of covered earnings by 2050
35%
Apply refined inflation measure (chained-CPI) to cost-of-living index
26%
Gradually increase retirement ages to 68 by 2050 / 69 by 2075
21%
Other²
--
Total Future Social Security Deficit Reduction
116%³

Note: 1) As % of the estimated present value of Social Security trust fund cumulative deficit in future 75 years. 2) Other measures include boosting benefit to oldest old retirees and covering newly hired state and local workers after 2020. 3) total deficit reduction does not equal to the sum of individual reductions owing to policy interplay. Source: National Commission on Fiscal Responsibility and Reform, “The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform,” 12/1/10.
KP CB www.kpcb.com
USA Inc. | What Might a Turnaround Expert Consider? 265

Restructure Social Security: Declining USA Household Savings Rate Creates Challenge to Reducing Benefits as Americans are Under-Saving, Thus Limiting Financial Cushion

Personal Savings Rate, 1965 – 2009
12%
10%
8%
6%
4%
2%
0%
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
9% 1965 – 1985 Average
3% 2000s Average
Personal Savings Rate (%)

Note: Personal savings rate is calculated as the amount of savings divided by disposable income (income after taxes).
Source: BEA.
KP CB www.kpcb.com
USA Inc. | What Might a Turnaround Expert Consider? 266

HOUSE_OVERSIGHT_020974