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NEWS RELEASE
Contact: David West (west@nsula.edu
)
News Bureau
Northwestern State University
Natchitoches, LA 71497
(318) 357-6466
5/24/2006
FOR IMMEDIATE RELEASE
NATCHITOCHES -For several decades, policymakers have worried about the health of the Social Security system. According to Northwestern State University Associate Professor of Finance Dr. Mark Schaub, none of the past solutions will solve Social Security's long-term problems.
Schaub authored an essay, "The Real Problem with the Social Security System," which appeared in the Journal of Financial Planning. The essay is available online at http://www.fpanet.org/journal/BetweenTheIssues/Essays/031506.cfm.
Schaub is the Hibernia National Bank Endowed Professor of Finance at NSU and was a co-recipient of the 2006 Mildred Hart Bailey Research Award.
In his article, Schaub pointed out the program is set up so the contributions of one generation pay for the retirement supplement of another generation. But the retirement of baby boomers will put a huge strain on the system. That along with longer life spans and inflation will draw down the system's trust fund.
Schaub said for decades the solution has seen to raise FICA rates. A middle-income worker's share of funding the program has grown by 10.2 percent a year since 1949. Schaub is skeptical that additional increases in FICA rates or the introduction of personal savings accounts will be the solution.