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Measuring Social Security's True Liability

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Publication Date: May 2009

Publisher(s): National Center for Policy Analysis (U.S.)

Author(s): Laurence J. Kotlikoff

Funder(s): National Center for Policy Analysis (U.S.)

Funder(s): National Center for Policy Analysis (U.S.)

Topic: Banking and finance (Taxation and tax policy)
Banking and finance (Public finance)

Keywords: liabilities; retirement; social security; trustees report

Type: Brief

Coverage: United States

Abstract:

Every year the Social Security Trustees publish a report on the fiscal solvency of the program. It details the program's unfunded liabilities, which is what the government will still owe after it uses current and future tax receipts to pay for current and future retiree benefits. In 2005, the Social Security Trustees estimated that the program's unfunded liabilities were $8.5 trillion. This means that even after accounting for payroll tax revenues the federal government would have to have this much money in the bank today, accruing interest, in order to pay promises to future retirees.