Online tool calculates social security

By HOLLI CHMELA, UPI Correspondent   |   Feb. 25, 2005 at 4:00 PM
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WASHINGTON, Feb. 25 (UPI) -- In an effort to get to numbers straight on social security benefits, the Center for Economic and Policy Research, in collaboration with the Institute for Women's Policy Research and Rock the Vote, has launched an online Social Security Accurate Benefit Calculator.

The calculator allows workers to compare and evaluate individual Social Security benefits under both the current system and Bush's proposed change, by plugging in variables such as age, marital status, planned retirement age, salary, and expected years taken off from work due to illness, child rearing, or other circumstances.

After filling out this brief demographic information, users simply click a button and an array of numbers, dollar figures and percentages appear, showing scheduled benefits under the current law, Bush's benefits with and without a private account, and benefits taking into account the percentage of annuities saved for inheritance.

The Co-Director of CEPR Dean Baker and CEPR researcher David Rosnick are the masterminds behind the non-partisan calculator. Their numbers are based on calculations from the Congressional Budget Office's projection that Social Security benefits will last until 2052, and takes into account realistic stock return projections, administrative fees, and projected wage growth. It also uses data from the Social Security Trustees' Report's estimate that SS benefits can be paid unchanged until the year 2042.

"We're trying to provide numbers that are reasonable in terms of the social security debate," Rosnick told United Press International. "We want to be realistic about stock returns. If you use unreasonable high stock projections, it makes returns look a lot higher for private accounts."

Rosnick said CEPR's rate on stock returns is based on the CBO's growth projection of a 4.35 percent real return, compared to the 6.5 percent figure Bush's plan uses.

According to Sunhwa Lee, Ph.D., a study director at IWPR, other partisan calculators used by proponents of the President's plan may use the higher number. She said the Cato Institute's Social Security Benefit Calculator ( is an example.

On the other hand, opponents of privatizing social security can use the numbers in their favor as well. Sen. Charles E. Schumer, D-NY, has a "Social In-Security" calculator on his Senate Web site ( that shows how much money people will lose under Bush's privatization plan.

"Calculators have different assumptions," Lee told UPI. "Some of the conservative think tanks like Cato assume you would put all of the money in private accounts, which is not what the president is proposing. But (CEPR's) calculator uses the President's Commission's ideas from Plan 2."

Plan 2 is part of the President's Commission to Strengthen Social Security introduced last year. Basically, the plan introduces individual, or private, accounts and changes from wage indexing of initial benefits to price indexing. It is based on the CBO's prediction "under current law, the government will be unable to pay scheduled benefits starting in 2053 and Social Security outlays will exceed revenues from payroll taxes and taxation of benefits beginning in 2019."

Lee, a consultant for CEPR's calculator concerning the impact of SS and private accounts on women, says the future is of SS is not as drastic as CBO predicts. She says there is not a SS crisis, but rather shortfalls that can be worked out with a more moderate approach.

"Even after the projected end of 100 percent social security benefits in 2042 or 2052, benefits in private accounts will be even less than scheduled benefit," Lee said. "At that time, the 70 to 80 percent rate is even greater than benefits in private accounts."

One example Lee said which the president has taken into consideration is increasing the wage cap tax. Currently, she said, the wage cap is set at $90,000, which means that people who earn more than $90,000 per year do not pay social security taxes on anything earned above the wage cap.

"There can be things done so more moderate changes will be effective to sustain benefits," Lee said. "There have been a lot of discussions on removing or lifting the wage cap. And many people, even the public, support that."

Rosnick agrees that there is not a crisis, and hopes people will be able to understand that more once they see the results of the non-partisan calculator.

"The problem is more than 50 years in the future according to the CBO estimates," Rosnick said. "If one was to say we're in a crisis, though, the solution is even more of a crisis. Regardless if people take personal accounts or not, we're talking about deep cuts in returns compared to the promised benefits."

Although Rosnick and Lee have their own views on SS policy, they emphasize the importance of CEPR's calculator being non-partisan and multi-faceted. Other non-partisan organizations like Rock the Vote and The Century Foundation are also interested in posting the calculator on their websites in order to show how the President's plan will affect different segments of the working population.

Christy DeBoe Hicks, vice president of the Office of Public Affairs for The Century Foundation said her organization likes CEPR's idea for a non-partisan calculator and would never put a partisan one on the TCF website.

"We work with CEPR and Dean Baker, we respect their work, and have collaborated with them in the past," Hicks told UPI. "We would never put a calculator on our website that was created by a partisan group. We are non-partisan and they are a non-partisan group as well. And, it's more detailed than other calculators are."

Hicks said TCF was planning on presenting the Calculator Tuesday with CEPR, but felt there were some user-friendly aspects that need to be worked out before TCF fully supports the calculator on its website.

"At The Century Foundation, we try to take complicated things and put them into plain English so that people can understand them more easily," Hicks said. When the organization received the calculator late last week, "It just wasn't right for our purposes because we wanted something that was very user-friendly."

Both CEPR and IWPR agree that the calculator is not in a perfected state yet. Rosnick said there were technical glitches that would be worked out by the end of next week and the final calculator -- in a more attractive state -- would be uploaded by April 1.

"We are still working to improve the calculator. There are many user-friendly aspects, so we're still in the middle of discussion," Lee said. She said the CEPR calculator will be available on the IWPR Web site, "as soon as it becomes available in an improved version, so that it is easier to use and easier to read for some audiences that do not know how social security works.

IWPR currently has a Social Security calculator on its Web site, but Lee said the organization wanted to work with CEPR on developing a calculator that took into account specific concerns for women, including private accounts and the more complex issues associated with a change in policy.

"CEPR's calculator provides a lot of options," Lee said. "Most of the other calculators do not take into account what's going to happen if you take time off, changes in annuities prices, or change in stock prices. Most calculators will just take your salary and your age and this one will give a lot more flexibility."

Lee said IWPR has not decided if CEPR's calculator will replace or supplement the current one, but noted it would be good to include both for comparison.

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