Robert D. Reischauer states on 5-18-99
As a result, the adjustments, most likely, will phased in gradually and shared broadly by tax payers and beneficiaries¯that is what has happened in the past.
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Interesting, can you name one time in the 65 year history of OASI where beneficiaries shared the price? Please do not try and say the one time delay in COLA was a price compariable with life time tax increases. I have not found one benefit cut! I see where my tax burden has increased well over 20,000% from the paltry $60 tax in 1937. My FICA tax burden has increased substantially since 1972. Not only has my tax increased, but the age at which I may retire has been increased by two years. So not only do I have to work two more years for full benefits, I must also pay two more years, most likely at my highest wages into the ponzi scheme. No wonder the average age of retirement today is under 63.
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Under a system of individual accounts, the adjustments will fall on the individuals.
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Under your system, where do you think the adjustments will fall? Who do you think pay the FICA taxes? The system has a $10 Trillion unfunded liability
It would require OASI to achieve a return of 15.83% each and every year on the current OASI fund and the cash surplus till 2015 to make the system solvent till 2100. Do you really think it is possible to earn 15.83% every year? Then there is the slight problem of financing over $40 trillion in the next 55 years. You see, the fund needs to borrow money early on and the high rate of return later on is used to pay off the debt. Mathematically it works out to be 15.83%, but economically I do not think it possible to borrow another $40 Trillion. How about you? You see with a ROR of 15.83% the OASI tax required to fund future benefits is very low. The excess OASI tax of 1,000% is used to pay current and past retirees unfunded liability.
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Under these assumptions, the replacement rate for those turning 62 in 1969-70 would have been close to 100 percent; for those turning 62 in the mid 1970s only 40 percent.
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What is wrong with this? OASI targets a 40% replacement rate already by taking 10.35 in 1999 for OASI. As for the rate of savings or in this case taxation to pay the 40% target, one can look at the following link and see how much the rate should be based on wage growth (OASI replacement rate up to age 60), increased in retirement by inflation and retiring at age 65 with full benefits. Rather ironic the OASI tax rate is over a 100% greater than required. This means one could loose half their money or get a real bad rate of half the US Treasury rate and still beat OASI benefits.
