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![handle is hein.taxfoundation/srfgxz0001 and id is 1 raw text is: FOUNDAION
January 1996
Number 56
Socia Seurty: A 1 ak Otloot k f(BIabyBon
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 for
retirement. In fact, the negative returns shown
in Figure I will almost certainly become worse
if lawmakers enact traditional reforms to keep
the Social Seeurity system from going broke in
the year 2029.
Traditional approaches of repairing the
solvency of the trust fund incltude increased
pVayroll taxes, reduced benefits, or postpon-
ing the eligible retirement age. StIch reforms
will make Social Security an even worse deal
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 lproductive alternative maN
be to break with tradition and implement
some type of plan which permits taxpayers
lgi'h re I
Real Rate oqlReturn on Social Security /or Average- Wage Earning Baby Boomer Couple
Z Current Soc. Sec. Law
50 49 48 47 46 45 44 43 42 41
L With Payroll Tax Increase*
40 39 38 37 37 36
35 34 33 32
Age in 1996
Paylroll uax inIrease that is proj ected to he necessary to keep Social SCC Iity olkult.
Note: The graph includes two estimates for 37-year olds, duC to the fact that from 2025 to 2026 the cligi hility age f or
tull Social Securit enefits rises rom 66 Nears aid I0 months to 67 eatrs.
SOlrcC: ITx Founditlion.
B)' Arthurl t Ill, M).I).
Senior Ecotomnist
Tax IolundationI
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