May 25, 2006 3:18 PM
The 2006 Social Security Trustees report is finally in and it contains mixed news.
According to a New York Times editorial of May 8, there is actually good news hidden in the report. Of course, President Bush and his “privateers” do not want people to know it. The report states that the estimated deficit in 2080 (Social Security uses 75-year periods in its calculations) is $57 billion less than last year’s projection. Part of the reason for this improvement is that statistics now assume that American women will have two children on average, instead of the previous prediction that they will have 1.95. The Social Security system thrives when population increases. Immigration is also a positive factor and, of course, stronger wage growth will help as well.
While some Social Security advocates, with good reason, believe the system will meet its obligations with no changes, others who are more prudent believe phasing in some changes (tweak here, tweak there) is the best way to ensure that the system won’t come up short in the future.
The not-so-good news is that the report estimates that the Social Security Trust Fund (savings) may be exhausted by the year 2040 — one year sooner than last year’s projection. But, the Government Accountability Office has not changed its prediction that the fund will not run out until 2052.
The depletion of the fund does not mean that benefits will stop. Last year, for example, the fund took in more than $700 billion and it will continue to take in amounts like that every year. By 2040, Social Security income will be higher and that income will be used to pay benefits. If no changes in Social Security occur, between 70 percent and 80 percent of benefits will be paid out of income. The difference is that the Trust Fund savings will no longer be available to make up the difference in benefits. But with small adjustments in some rules and with a change in the asset allocation of the trust’s funds, the possible shortfall can be eliminated.
If no other change is made except for increasing by 2.02 percent the contributions paid by employee and employer —1.01 percent each — the fund will be able pay full benefits for at least 75 years. There are other options, since there is always resistance to paying higher taxes. So a tweak here and a tweak there in the rules, contributions or investment choices can also easily make up any predicted shortfall.
The UFT and its allies, the AFL-CIO and the Alliance for Retired Americans (ARA) will be in the forefront of protecting this truly Golden Oldie.
The 2006 TDA Spring Campaign is currently underway. About 35,000 members received a TDA enrollment kit. Have you responded?
On March 25, TRS participated in the UFT’s annual Para Fest. TRS distributed more than 500 information packages and conducted two workshops, which were attended by about 200 paraprofessionals. The paras were very appreciative.
May is the month to file TDA election change forms. Both in-service members and those with TDA Deferral status may file.
The form can be filed by application (TD 45) or online, for those who have full access. Deadline for filing is June 1 and changes begin July 1.
TRS is preparing to distribute the Quarterly Account Statement (QAS) for the first quarter of 2006. These statements will summarize both the QPP and TDA accounts. They will be sent to in-service members and those on leave of absence for up to seven school years.
“On retirement” is compiled and written by Mel Aaronson, Sandra March and Mona Romain, teacher-members of the NYC Teachers’ Retirement Board. For further information on items discussed, call your UFT borough office or the TRS. BRONX: 1-718-379-6200; BROOKLYN: 1-718-852-4900; MANHATTAN: 1-212-598-6800; QUEENS: 1-718-275-4400; STATEN ISLAND: 1-718-605-1400; Teachers’ Retirement System: 1-888-8NYC-TRS (692-877).