Frequently Asked Questions
Where did you get the disability payout percentages you quoted on the home page?
The best sources for OASDI data are the annual reports from the board of trustees of the Social Security Administration. You can access the reports from 1997 to 2012 directly from the Social Security website; select a year, hit “Go”, and then click on “available in PDF” in the first paragraph.
Table II.B1 on page 6 of the 2012 report shows that the total expenditures for OASI in 2011 was 603.8 billion and the 132.8 billion of DI. That comes to 17.973% of the expenditures for Disability.
The older reports are more difficult to find online. Links to the 1982 report are easier to find because it was used as a basis for the 1983 legislation. Table 2 on page 4 of that report shows that the total expenditures for OASI in 2011 was 142.1 billion and the 18 billion of DI. That comes to 11.243% of the expenditures for Disability.
The biggest problem with the solution is that it is simple. Logical, and fair; so it will be resisted by our Political establishment and all of the special interest groups who would therefore lose much of their control over our lives.
How can you define the same life expectancy for everyone?
Why can't I just opt out of the program and take care of my own retirements?
The plan provides a minimal adequate income for the elderly who have worked all their lives. If we did away with the system and went to private accounts, low-wage workers would be unlikely to generate enough savings to provide for themselves in retirement and middle-income workers would be at greater risk of poverty in old age. All financial markets do not yield the same return. Many of those who invest badly would not have enough to live on. Markets also fluctuate. Anyone who is forced to retire during a long market downturn would only have paltry annuities available at retirement. Anyone who lived into their 80s or 90s would most likely outlast their savings and, even if they had purchased lifetime annuities, their annuity payments would be severely eroded by inflation.
What if I retire early then discover I made a mistake?
That is an excellent question, and the new system could work very well for that. Let’s add a new “taken” column to the early retirement example. You retire early at 65 then after 2 years discover that 55% of your benefit will not be enough for the rest of your life. You suspend your benefits and go back to work until your FRA (Full Retirement Age).
The new “taken” value, 2 years, is subtracted from make and added to take before your new ratio is calculated. Your ratio is now 4 to 1 or 80% of 5 to 1. If you work the additional two years to make up for the two retirement years that you took at age 65, you can still get your full 100% benefit, but now it starts at age 73.