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American Academy of Actuaries Publishes Brief on Social Security Reform Benefit Formula Options

Recently, the American Academy of Actuaries published its issue brief, Social Security Reform: Benefit Formula Options. According to the brief, the Social Security Program’s long-term solvency is threatened by the growing number of retirees which has outpaced the number of workers supporting the program. As stated in the 2021 Social Security Trustee Report, accumulated assets are projected to be depleted by 2034 and income to the system afterward is expected to be insufficient to pay all scheduled benefits when due.

According to the brief, the shortfall may be completely or partially averted by:

  • Changing the primary formula for retired worker benefits;
  • Changing the formulas for determining the benefits of eligible spouses and other dependents; and/or
  • Changing the formula for computing annual cost-of-living increases.

The brief provides an overview of the current Social Security benefit calculation formulas for both workers and spouses. In addition, it discusses various reform proposals for changing the formulas for determining benefits that have been made by members of Congress, government-appointed panels and commissions, and outside experts over the years. It also focuses on the possible effects of the proposed changes on the balance between individual equity and social adequacy.

The brief is available here.