Newspaper article St Louis Post-Dispatch (MO)

3 Saviors for Social Security?

Newspaper article St Louis Post-Dispatch (MO)

3 Saviors for Social Security?

Article excerpt

Billions of dollars in Social Security money would be invested in the stock market rather than in government bonds under proposals submitted by a splintered government panel.

A year behind schedule, the Social Security Advisory Council released its final report Monday on how to rescue the government's biggest benefit program from bankruptcy in the next century.

Although payroll taxes now exceed Social Security payments by $60 billion a year, payments will begin exceeding revenues by 2012, when baby boomers start to retire. The Social Security trust fund will be exhausted by about 2029, and annual tax revenues will cover only 77 percent of benefits. The 13-member council, appointed by law every four years, produced three rival recommendations. All three plans would seek to boost workers' retirement nest eggs by allowing Social Security funds to be invested in the stock market. But the three plans differ sharply on how those stock investments would be handled. One option would have a government board invest up to 40 percent of the Social Security trust fund in an indexed portfolio of stocks and bonds but not allow individual workers a choice in the investments. That plan also received the most support - six votes - and called for relatively minor adjustments. The two other options would establish individual accounts, similar to the current tax-deferred Individual Retirement Accounts, and allow workers to make choices on how the money is invested. They also would involve a combination of reducing benefits and raising payroll taxes. Overall, the council agreed on changes that would solve a large chunk of the financing problem. Those include extending Social Security to new state and local government workers and requiring retirees to pay taxes on benefits that exceed what they paid into the system. Although all three groups backed stock investments, the group arguing that the government make the investments criticized the other plans and vowed to work actively to defeat those ideas as a threat to the financial security of low-income recipients. …

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