University of Pennsylvania’s Wharton School professor Kent Smetters has developed a new budget modeling system with the help of an all-star team of economists.
Its findings? Social Security could run out of money three years earlier than previously projected.
The analysis of spending and demographic data uncovered information that points to the trust fund’s insolvency by 2031.
According to The Hill, Smetters, a former Congressional Budget Office economist and Treasury Department deputy secretary, recruited former Office of Management and Budget director Peter Orszag, former White House chief economist Austan Goolsbee, and Committee for a Responsible Federal Budget President Maya MacGuineas to help.
It notes, “The Obama administration …released its projections for the Social Security and Medicare trust funds. Officials warned that the two programs, which made up roughly 40 percent of federal spending in 2015, would becoming insolvent within 20 years.”
“Medicare faces a substantial, long-term shortfall that needs to be addressed,” Treasury Secretary Jack Lew told reporters.
The news comes in the wake of last December’s budget deal, in which Congress gutted two claiming strategies, file-and-suspend and restricted application, making it harder for advisors to help clients optimize Social Security to ensure retirement assets last.