In its statement, the Academy said that many think the system’s long-term financial crisis is due to the wave of baby boomer retirements which started this year. However, according to the statement, Social Security will be underfunded long after baby boomers are gone, and the permanent financial imbalance is due in large part to individual longevity.
The Academy said raising the Social Security retirement age would contribute to solving the system’s financial problems.
In addition, the actuary group urged policy makers not to wait to address the system’s problems. “[I]n the case of Social Security, waiting will limit the available options – and tend to force solutions that emphasize sudden changes that are more likely to involve tax increases,” the statement says.
By acting now, the group contended, tax increases could be phased in more gradually and benefit reductions could be spread over a larger demographic, making them less severe. Also, the sooner new legislation is enacted, the more time individuals will have to modify their financial plans, the statement said.
“Timely action can make the solutions more acceptable to all concerned,” the Academy concluded.
The American Academy of Actuaries’ Position Statement is here .