ST. LOUIS, April 10 (UPI) -- Critics say Social Security is headed for bankruptcy as baby boomers retire, but a U.S. professor says this incorrect analysis is based on the 1950s worker.
Merton C. Bernstein, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law, says in 1950, 15 people were at work for each Social Security recipient and that the ratio will decline to 2.2 people per recipient.
"This analysis mistakenly assumes that the 1950 worker was as productive as his or her successors," Bernstein says in a statement.
"Each successive wave of working people uses more advanced technology. Therefore they will produce more, earn more and generate more Federal Insurance Contributions Act per capita than individuals in 1950."
Bernstein says Social Security is on course to provide full benefits to its expected beneficiaries through 2036 due to its multitrillion dollar trust fund.
"Raising or removing the cap on earnings subject to FICA could ease or erase the projected longer-term funding shortfall, depending on how it is constructed," Bernstein says.
"Such a measure has widespread support, including from the co-chairs of the Commission on Fiscal Responsibility."
Social Security -- designed to be part of a retirement savings plan that also included a pension and personal savings -- has become more important than ever as private pensions have been replaced with 401(K)s and individual retirement accounts.
On average, one-quarter of the value of 401(k)s and IRAs were lost during the four years starting in 2008, Bernstein says.
