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Security- A .
By Arthur Y. Hall, Ph. /).
Most members of the baby-boom genera-
tion — those people born between 1946 and
1964 — can expect to lose money on Social Se-
curity when it is viewed as an investment fo r
retirement . In fact, the negative returns show n
in /-'igure / will almost certainly become wors e
if lawmakers enact traditional reforms to kee p
the Social Security system from going broke i n
the year 2029 .
Traditional approaches of repairing the
solvency of the trust fund include increase d
payroll taxes, reduced benefits, or postpon-
ing the eligible retirement age . Such reforms
will make Social Security an even worse dea l
for baby boomers—and the generations that
follow them—because they each have the ef-
fect of raising the cost of Social Security ben-
efits . The only productive alternative may
be to break with tradition and implement
some type of plan which permits taxpayers
Real Rate of Return on Social Security for Average-Wage Earning Baby Boomer Couple
50 49 48 47 46 45 44 43 42 41
39 38 37 37 36 35 34 33 3 2
Age in 199 6
Payroll tax increase that is projected to be necessary to keel) Social Security solvent .
Note : The graph includes two estimates for 37-year-olds, due to the fact that from 2025 to 2026 the eligibility age fo r
full Social Security benefits rises from 66 years and 10 months to 67 years .
Source : "fax Foundation .
Current Soc . Sec. Law
With Payroll Tax Increase*
0 . 0
-0 . 5
-1 . 0
-1 . 5
Real Rate of Return on Employer/Employee Payroll Taxes for Selecte d
Members of the Baby-Boom Generation
Low Wage Couple
Average Wage Couple
High Wage Coupl e
Year o f
-2 .60 %
-2 .55 %