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Most Americans retire between the ages of 62 and 64.  And the average American is now expected to live to 79, meaning people who retire at 62 can receive 17 years or more of government benefits like Social Security.

But Americans’ practical ability to retire is in jeopardy, as The Heritage Foundation’s David John reported last fall:

Americans’ ability to build a secure retirement is increasingly in danger. In addition to Social Security’s rapidly approaching fiscal problems and underfunded traditional defined-benefit pensions, the retirement savings system is available to only about half of the workforce and needs other improvements before today’s workers can create sufficient retirement income.

One alternative would be for seniors to change when they retire, Heritage’s Romina Boccia suggests: Continue Reading »

Heritage experts analyses of Social Security and Medicare were featured in the June-July issues of AARP Magazine.

Heritage Foundation experts David John and Stuart Butler took to the pages of AARP Magazine to make the case for the essential reforms to Social Security and Medicare in our Saving the American Dream plan.

Heritage’s conservative message about how to ensure retirement and health security for seniors reached 20 million Americans through AARP Magazine. Absent reforms to entitlement programs, spending on these programs will grow unsustainably, forcing either ruinous tax hikes, benefit cuts, or both.

Butler, who directs Heritage’s Center for Policy Innovation, argues in the magazine for common sense Medicare reforms. Over five years, Heritage’s plan transforms Medicare from an unsustainable defined-benefit entitlement into a budgeted, defined-contribution program, much like members of Congress now enjoy. Continue Reading »

The federal government is crippling future generations of Americans with debt.

“The amount of spending on Medicare, Medicaid, Social Security and Obamacare subsidies will soar over the next 38 years, leaving future generations with an alarming debt burden,”  warns The Heritage Foundation’s Alison Meyer.

If Congress fails to act on principled reforms, spending on these entitlement progarms will nearly double by 2050.

Heritage policy expert David John explains spending on entitlement programs will soar to fully 19 percent of GDP by 2050:

Continue Reading »

David John

With Social Security’s facing a questionable future, it’s all the more important that Congress act to facilitate retirement savings by private individuals, The Heritage Foundation’s David John told lawmakers in testimony last week.

“The Automatic IRA offers most employees who are not covered by any form of employer-sponsored retirement plan the opportunity to save through the powerful mechanism of regular payroll deposits that continue automatically,” John told members of the House Ways and Means Committee.

This proposed plan would allow workers to save their own funds to supplement Social Security income in retirement, he continued: Continue Reading »

Heritage Foundation scholar David John summarizes a new report from the trustees of the Social Security program:

The April 23 report shows that all people who receive Social Security benefits face about a 25 percent benefit cut as soon as 2033—three years earlier than predicted in last year’s report. The program’s long-term deficit is now larger than it was before the 1983 reforms. In order to pay all of its promised benefits, Social Security would require massive annual injections of general revenue tax money in addition to what the program receives from payroll taxes.

Social Security is already running annual deficits, John adds. In 2011, benefits totaled $11.5 billion more than contributions. These deficits will only grow as more and more Baby Boomers retire.

Worse, many lawmakers continue to believe that the program can be saved by the Social Security trust fund. Continue Reading »

David John

The federal government should not act to bail out state and local public-employee pension funds, Heritage Foundation expert David John says in a new report.

The pension plans were created by the states and resolving their problems is ultimately a state responsibility, he says.

Congress should have little or no role in state and local government employee pension plans. It should not step in and attempt to impose a solution, a model for reform, or a bailout of severely troubled states. Just as states and local governments created the public pension problems they now face, it should also be their responsibility to deal with these situations. Even with the best intentions, it would be fairly easy for a reform plan to end up including a full or partial bailout as an incentive for states to act.

Thirty-one state public pension plans have “funding ratios that are under 80 percent of what is needed to pay full benefits,” John writes. “A ratio that is under 80 percent indicates that the plan is in severe trouble and will have great difficulty meeting its obligations. This is not a small problem.”

A new report by Senate Finance Committee Republican staff rightly argues that “a federal bailout of the states should be avoided at all costs.” But it ominously warns that a “legislative solution for consideration by Congress will be introduced in the Senate in the near future.”

What do you think? Should federal taxpayers be on the hook for state and local financial troubles?

The 2011 Trustees Report on Social Security was released just days ago, and the results, though unsurprising, are not good.

The Heritage Foundation’s top Social Security expert, David John, explains that the program is already running massive annual deficits. And these deficits are set to continue into the future and grow still larger.

“In 2010, Social Security spent $49 billion more in benefits that it took in from its payroll tax,” he writes. “This year, that deficit will be approximately $46 billion.”

The reported data should be enough to put to rest any questions about whether Social Security faces a problem and needs to be fixed. It does need fixing, and the time to do so is now. Continue Reading »

The President’s Fiscal Commission issued its preliminary report today. By and large, the report’s recommendations are positive first steps, Heritage Foundation experts report. But that’s all they are: first steps.

In an analysis on Heritage’s blog The Foundry, Heritage experts Alison Fraser, Curtis Dubay, Mackenzie Eaglen, David John, and Bob Moffit outline areas of improvement in the report. They note specifically that any realistic plan should fully fund defense, reform runaway entitlement spending, eliminate Obamacare and permanently lower personal and corporate tax rates.

Heritage research also shows the danger and futility of raising tax rates, especially during a recession. Conn Carroll notes that:

Our federal deficit problem can not be solved by raising taxes. The expected revenues will never materialize. Cutting spending, shrinking government, and allowing for more economic growth is the only way we can climb out of the hole we are in.

High taxes simply discourage productive behavior. For example, after Maryland enacted a tax on high-income earners to cover its deficit, fully a third of those affected “disappeared from Maryland tax rolls.”

In the 6:00 p.m. Eastern hour on Fox News’ “Special Report,” Heritage legal expert Cully Stimson will discuss WikiLeaks and the information released about Guantanamo Bay.

Earlier today on CNBC’s “Squawk on the Street,” Heritage expert David John explained why raising taxes on upper income brackets to preserve Social Security would only postpone inevitable deficits while harming small business owners and hurting employment. Watch the video below.

Update: Tax expert Curtis Dubay will appear on CNBC’s “The Kudlow Report” tonight at 7:15 p.m. to explain why raising taxes on anyone will hurt the entire economy.

Today at 2:20 p.m. Eastern on CNBC’s “Street Signs,” Heritage national security expert Mackenzie Eaglen will discuss the timeline for withdrawal from Afghanistan.

And in an interview with Jim Angle, Heritage economist David John will discuss Fannie Mae and Freddie Mac’s costs to U.S. taxpayers on Fox News’ “Special Report” in the 6:00 p.m. hour.

Mackenzie Eaglen

David John