Economist says leave Social Security alone

Saturday, February 19, 2005

Doing nothing may be the best solution to the nation's Social Security crisis, local economist Dr. Bruce Domazlicky said Friday.

The financial troubles looming in the nation's massive retirement program could mean lower benefits for future elderly Americans, he said. But it also could spark working Americans to start investing more money for retirement and relying less on the federal government, Domazlicky said.

That, in turn, could spark economic growth, he said during the seventh annual economic conference at Southeast Missouri State University.

President Bush has proposed privatizing part of the 70-year-old Social Security system to allow for voluntary private retirement accounts.

But financial analysts at Southeast say that won't solve the funding problem for a system where the ratio of workers to beneficiaries continues to decline.

In 1950, there were 16 workers paying into the system for every American drawing a Social Security check. By 1960, the ratio became 5 to 1. Today, there are just over three workers paying into the system for every beneficiary.

In all, 159 million Americans are taxed to provide Social Security checks for 47 million people, said William DeBardelaben, regional communications director for the Social Security Administration in Atlanta. DeBardelaben spoke at the conference before an audience of about 60 students, faculty and area residents at Dempster Hall's Glenn Auditorium.

Faced with an increasing number of elderly, the government retirement system will have to dip into bond investments to issue the monthly retirement checks by 2018, he said.

By 2030, an estimated 20 percent of Americans will be 65 years of age or older, DeBardelaben said. Without changes, the government will be able to pay only 73 percent of benefits by 2042.

That's a major concern in a nation where the elderly depend on Social Security to make ends meet.

"One in five Americans over age 65 has no other income," DeBardelaben said.

But Social Security was never designed to be the sole source of retirement income for Americans, he said.

More than 47 million Americans -- including more than 1 million in Missouri -- receive Social Security benefits, he said. The average monthly retirement benefit of $955 is the main source of income for about two-thirds of the nation's elderly, DeBardelaben said.

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