AICPA Analyzes Social Security

By Danielle D'Angelo

In an effort to aid legislators in what is expected to be a complex and contentious debate in the 106th Congress, the AICPA recently released a comprehensive nonpartisan analysis of Social Security, including options for reform.

"Decision makers need facts--not spin," said David A. Lifson, NYSSCPA vice president and chair of the AICPA's Tax Executive Committee, which assisted in developing the study. "Before Congress takes a position on the 'right' solution for Social Security reform, the AICPA strongly urges policy makers and the public to have a clear understanding of the issues."

The AICPA collaborated over two years with a group of leading CPAs, tax specialists, and economic analysts to develop the study, Understanding Social Security: The Issues and Alternatives. The result is an objective presentation of Social Security's impact and the various reform options. Some of its highlights include the following data:

* Social Security keeps the majority of Americans over 65 out of poverty; in fact, for 40 percent of America's elderly, Social Security accounts for more than 75 percent of total income at retirement.

* About 90 percent of current retirees receive Social Security benefits averaging only $750 per month, and future retirees will likely receive even less.

* Serious pockets of poverty still exist for the elderly, and therefore there is a corresponding reliance on Social Security income. Older women are twice as likely as men to be in poverty and for both African Americans and Hispanic Americans, the elderly poverty, rates hover at approximately 25 percent--about two and a half times larger than that for white Americans.

* The number of workers per beneficiary continues to decline. In 1960, the worker-to-beneficiary ratio was 8.6 to 1, currently it is 3.3 to 1, and it is projected to be 2.2 to 1 in 2025.

The AICPA has taken a visible role in the Social Security debate and Daryl Jackson, chair of its Social Security Task Force, is among the invited participants in the White House summit on the issue, which held its first meeting December 8 in Washington, D.C. Jackson said the AICPA's study will help all Americans, including current and future beneficiaries of Social Security, understand the implications of reform in an effort to reach a consensus and gain acceptance of a new system.

Also among the major issues examined in the study are Social Security's current financial condition and its relationship to poverty in America, individual fairness in terms of benefits and investments, the national economy, and the stock market. The report also analyzes six major reform options including maintaining benefits, individual accounts, personal security accounts, the Feldstein-Samwick personal retirement account plan, the Social Security Solvency Act of 1998 proposed by Sen. Daniel Patrick Moynihan (D-N.Y.), and the 21st century retirement security plan.