The NY Times Sunday Review features an extraordinary data-dive into the workings of the Social Security Trust Fund life-span estimation process. Their conclusion - the Social Security actuaries are using outmoded techniques; contemporary analytical tools suggest that Americans will live longer and deplete the (notional) Social Security Trust Fund faster than currently forecast. Properly adjusted forecasts would show Social Security spending an additional $800 billion (cumulatively) by 2031, which is roughly $40 billion per year.
And the authors discover a real howler - apparently the Mayans have found a toehold in the Social Security office:
So fifteen years from now everyone aged 55-59 will die? This has to be a blow to current 40-44 year olds. Geez, all those folks walking around reassuring themselves that life begins at 40 now find it will end in the late 50's. I'd say don't blame me, I voted for Romney, but I am sure this is a bipartisan methodlogical whoopsie.
For the first time in more than a quarter-century, Social Security ran a deficit in 2010: It spent $49 billion dollars more in benefits than it received in revenues, and drew from its trust funds to cover the shortfall. Those funds [an accounting reality but economic fiction]— a $2.7 trillion buffer built in anticipation of retiring baby boomers — will be exhausted by 2033, the government currently projects.
Those facts are widely known. What’s not is that the Social Security Administration underestimates how long Americans will live and how much the trust funds will need to pay out — to the tune of $800 billion by 2031, more than the current annual defense budget — and that the trust funds will run out, if nothing is done, two years earlier than the government has predicted.
So over the next twenty years Social Security forecasts are short by (very roughly) $40 billion per year. OK, that is not a trivial number even by contemporary budgeting standards in Washington.
This totally conflicts with the liberal progressive catechism of Social Security Denialism but I am sure the reality-based community will embrace this new reality.
ANOTHER QUESTION I CAN'T ANSWER: The authors show their revised life expectancies for different age cohorts as of 2030. One of the cohorts is the 55-59 year old group. But didn't a lot of that group die in 2028?
Obviously, if all the 55-59 year old die in 2028 there will still be some people around to populate the 55-59 year old group two years later (namely the folks who were 53 or 54 in 2028). Still one wonders how the actuaries could overlook that sort of a gap, where a particular age range is just gone.