AICPA Releases Analysis of Social Security

As an overhaul of the Social Security program takes center stage during the second term of the Bush administration, the American Institute of CPAs has released a comprehensive analysis of factors that should be considered in a reform strategy. The institute said that the catalyst for the report -- developed by economic, tax and accounting experts -- was the Social Security Administration's estimate that the Social Security Trust Fund balance will peak in 2028 and be exhausted by 2041. Benefits would then be limited to the then-current cash flow into the system. Current actuarial calculations indicate that the trust fund will need an additional $3.5 trillion to pay anticipated future benefits over the next 75 years. "The debate surrounding Social Security reform brings to the forefront philosophical differences, varying opinions, and the age-old trade-offs between fairness, simplicity, economic growth and social policy. We at the AICPA strongly urge policymakers and the public to thoroughly understand the issues surrounding Social Security reform before taking a position," said the AICPA's vice president of taxation, Tom Ochsenschlager. The report, available online at www.aicpa.org/members/socsec.htm, addresses the pros and cons of such issues as: _ The current financial condition of Social Security; _ The relationship between Social Security and the elderly living in poverty; _ The redistribution of income inherent in the current system and how changes might affect that in the future; _ How changes to the current system might affect decisions about when to retire, the amount of work performed in retirement and personal savings rates; _ The tradeoff between additional risk and higher rates of return; and, _ Potential issues related to transition funding.