The long-term viability and future of the Social Security system are once again topics of debate among many concerned Americans and policymakers. The debate reflects the growing divide between both political parties about whether Social Security is at risk, whether it will deliver promised benefits when American workers retire and whether it requires significant overhaul.

The issues surrounding Social Security reform are incredibly complex. Americans and lawmakers are being asked to consider a host of changes including private investment accounts, reduced future benefits and increased payroll taxes.

To help policymakers and interested Americans understand these issues, the AICPA has released “Understanding Social Security Reform: The Issues and Alternatives.” The goal of the report is to foster informed discussion by providing unbiased facts and analysis of the issues.

The AICPA first published “Understanding Social Security” in 1998. In January 2005, President George W. Bush announced that he would make Social Security reform a priority for his second term. The second report edition was developed to help facilitate the ensuing debate.

The report provides comprehensive analysis of the Social Security reform issues. It includes an overview of the current financial condition of Social Security, its impact on poverty, especially of elderly Americans, and the fairness of benefit distribution in the current system. It also looks at both traditional methods of restoring fiscal balance to the Social Security Trust Fund as well as the various proposals that take new approaches, such as private accounts. In the process, it addresses the shifting demographics of wage-earners and economic assumptions that contribute to the system’s complexity and the difficulty of the reform debate.

“The debate surrounding Social Security reform brings to the forefront philosophical differences, varying opinions and the age old trade-offs between fairness, simplicity, economic growth and social policy,” said Tom Ochsenschlager, AICPA vice president of taxation. “We strongly urge policymakers and the public to thoroughly understand the issues surrounding Social Security reform before taking a position.”

The Social Security Administration “best guess” estimates predict that its Trust Fund balance will peak in 2028 and be exhausted by 2041. Benefits will then be limited to the then-current cash flow into the system. Current actuarial calculations indicate the Trust Fund will need an additional $3.5 trillion to pay anticipated future benefits over the next 75 years.

The CPA profession can contribute significantly to the reform discussion. Known for their unbiased and independent analysis of complex issues, CPAs can help Americans understand Social Security reform proposals, their impact upon the economy and tax implications. CPAs are trained and qualified to evaluate facts and figures, and offer to the public an objective perspective to an important and emotional debate.

CPAs also can focus on helping Americans understand their increasing responsibility for their own retirement planning. 360 Degrees of Financial Literacy is a national effort of the CPA profession to improve Americans’ financial understanding and knowledge.

The 360 Degrees web site helps consumers identify solutions to financial issues and includes resources to help them assess their Social Security benefits, understand how much they need to save for retirement and their investment options, and how to put a retirement savings plan into action.

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