I allowed EBRI to publish the comparative work on the theory that all the numbers were consistently misleading, but did allow a constrained comparison of the present Social Security design with a number of reform options. For instance, I noted that my wife received her statement. Both of us, however, have living parents who rely on Social Security. Mine are now 86 and 83, and were it not for their income from Social Security, I would be paying part of their living expenses directly. Instead, the taxes I pay to Social Security get mailed to my parents.
Additional problems can arise in the calculation as well.
Aside from the worthiness of calculating rates of return discussed above, the paper made a crucial economic assumption that immediately leads to a lower rate of return being calculated for all individuals. This crucial assumption is that all payroll tax revenue in excess of benefits paid in each year that has accumulated in the Social Security Trust Fund, and is expected to continue to accumulate there until 2015, is assumed to be never paid out as benefits. Instead, in their calculations, payroll taxes are increased to equal the benefits to be paid in each year after 2014. If a reader did not carefully examine the assumptions and calculations of the Heritage paper, a seriously incorrect interpretation would be taken away from the report. Thus, the assumptions used in any model need to be clearly disclosed and understood to allow individuals to correctly evaluate any results emanating from that model.