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Declining birth rate helps fuel Social Security problems
by Lawrence M. O'Rourke
McClatchy Newspapers


January 25, 2005

Washington - While Social Security's problems are often blamed on the impending retirement of the baby boomers, the low birth rate in the United States could be just as much at fault.

Stephen Goss, chief actuary at the Social Security Administration, said that if the baby boomers had had more babies, the federal retirement system likely would be facing a cash shortfall "substantially less" than projected.

But it would have taken "a quite higher birth rate" to make Social Security solvent indefinitely, he said.

The problems at Social Security, said Goss, are "demographic driven." He declared that the growth in the number of Americans paying Social Security taxes is "slowing right now" because birth rates dipped in the 1970s.

Changes in birth and death rates, along with other factors, have combined to change the proportion of retirees drawing Social Security benefits and those working and paying payroll taxes into Social Security.

Federal officials say there were 16 workers per beneficiary 70 years ago when Social Security was created under President Franklin Roosevelt.

Goss said that there are now 3.3 workers for every beneficiary, but that number will drop to 2 workers in 2040 and 1.9 workers in 2065. In contrast, the front edge of the baby boom generation will reach retirement age in 2008 and millions more will get there in the following decade.

Goss pointed out during a forum on Capitol Hill Friday that the U.S. fertility rate was about 2.2 per woman in 1940 and increased after World War II to 3.7 in 1957.

It then fell to 1.7 in 1976 and rose to 2.07 in 1990. Since then the rate has remained fairly stable, at about two children per woman.

Social Security trustees project that birth rates will remain at the two children per woman level until around 2020.

The estimates in fertility rates, the trustees said, "have resulted from changes in many factors, including social attitudes, economic conditions, and the use of birth control methods."

Projections about Social Security's solvency are "full of uncertainties," Goss said.


Distributed by Scripps Howard News Service.

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