WINDSOR, Conn., Apr. 13, 2010 — Michael Tanner, senior fellow at the Cato Institute, opened the 2010 Retirement Industry Conference and outlined the growing problem the American entitlement programs are creating for the financial well-being of the United States.
“The present value of our future obligations is more than $100 trillion and as the full force of entitlement programs kicks in, it will only get worse,” Tanner said to more than 350 retirement professionals. “There is no courage in Washington until someone is willing to stand up and do something.”
Tanner went on to outline the specific liabilities of the major entitlement programs — Social Security, Medicare and Medicaid. According to the senior fellow, Social Security faces unfunded liabilities of more than $15.8 trillion, while Medicare budget shortfall is as much as $100 trillion. Medicaid, he said, faces the same type of accounting shortfalls, but it will soon add hundreds of billions of dollars to federal, not to mention state, spending. Collectively our unfunded liabilities will eat up more than 40 percent of GDP by the middle of the century.
Tanner talked about the feasibility to pay for these programs by raising taxes. He estimated that we would have to raise both the corporate tax rate and top income tax rate from their current 35 percent to 88 percent and the current 25 percent tax rate for middle-income workers to 63 percent. He concluded that raising taxes would only do so much. Tanner told the audience that cutting spending and reforming entitlement programs is essential if we hope to realistically meet our future financial obligations.
“Clearly, the current entitlement programs are unsustainable. Americans are going to have to take more responsibility for their financial security — especially in retirement,” said Robert Kerzner, president and CEO of LIMRA, LOMA and LL Global. “During National Retirement Planning Week, LIMRA and LOMA are pleased to host an event that helps our industry focus on the challenges consumers face in retirement and provides an opportunity to learn effective strategies to help consumers meet their financial goals.”
The Retirement Industry Conference is hosted annually by LIMRA, LOMA and Society of Actuaries. More than 350 retirement industry professionals from companies across the globe will attend the Retirement Industry Conference to gain insights on the latest industry developments and equip themselves with solutions to address the complex challenges they face every day.
LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.