by Administrator
16. February 2009 06:28
By Paul Briand / Baby Boomer Examiner - With 10,000 Baby Boomers applying each day for Social Security, the tap on benefits is flowing faster than at any time in history.
There's been concern for a long time about how the pace of benefits to the gray tsunami of Baby Boomers will affect the long term health of Social Security and Medicare.
But there's another concern out there: the growing ranks of the unemployed. As of January, the unemployment rate stood at 7.6 of the American workforce, its highest level in 16 years. Some expect the rate to climb to 9 percent before the economy and jobs availability improves.
Since the recession began in December 2007, 3.6 million jobs have been lost, 598,000 of them in January alone.
That's millions of people who aren't working, who no longer have payroll taxes, who no longer are contributing to Social Security and Medicare.
With a benefits system taxed by Baby Boomers, what happens when millions and millions of fewer workers are contributing into the system?
It's something that actuaries and researchers like the Center for Retirement Research at Boston College will be watching.
Andrew Eschtruth, associate director for external relations, at the research center said a Social Security Administration actuary report in late March/early April will likely assess both the short-term and long-term effects of a recession on contributions.
"Until we see that we won't know the impact," he said of the current rate of employment.
So far, he said, no one he's talked to has expressed any alarm that lingering unemployment will adversely affect the financial adequacy of Social Security.
For example, according to Eschtruth, the effects of a high unemployment rate might be offset by other factors, such as lower Social Security disability payments.
At most, the SSA actuaries might have to make an adjustment to their short-term forecast.
Meanwhile, the Social Security Administration itself is hardpressed to handle the influx of Baby Boomer applicants, according to a Government Accountability Office report.
Because of retirements of SSA employees and budget cuts, the number of SSA field office workers dropped from 28,790 in 2005 to 27,534 in 2008, representing a 4.4 percent drop, said the report.
SSA faces a growing backlog of work, exacerbated by an increase in retirements and disability filings, the report noted. The agency anticipates its annual workload will increase by about 1 million annual claims by 2017, the GAO stated. The agency also has predicted that 44 percent of its staff will retire by 2016.
Recognizing this, the SSA has attempted to meet at least some of the need by offering an online ability to apply for benefits.
But even this may not be enough.
"While the plan includes a goal of significantly expanding the use of electronic services, it is not clear how this will mitigate SSA's increasing workload," GAO said.