SOCIAL SECURITY: Pay Now, Buy Later

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For 75 million U.S. workers—nine out of every ten—1959's first pay envelope was a little slimmer than 1959's last one. Reason: the social security nibble, which started out at 1% of the first $3,000 of pay back in 1937, increased at year's beginning from 2½% of the first $4,200 of pay to 2¼% of the first $4,800 (up $25.50 to $120 a year for a worker who makes $4,800 a year or more). But when 1959's first social security checks go out in the mail, they will be a little fatter than they were in 1958, with the minimum up from $30 to $33, and the family maximum up from $200 to $254.

Is the enormous social security fund (current reserves: $22 billion) really secure between the time the wage earner is nibbled and the time he begins to get his payments? Yes, reported a Congress-created advisory council on social security financing, a panel of 13 businessmen, labor leaders, university professors and insurance actuaries. Their summary: the financing of the Old Age and Survivors' Insurance system is "sound, practical and appropriate."

By the council's arithmetic, the future bite schedule enacted by Congress last year—providing for a gradual increase to 4½% of the first $4,800 of income by 1969—"makes adequate provision" for estimated future payments. This year OASI will pay out $9.7 billion, around $1 billion more than it takes in, but it will still have nearly $21 billion in the kitty, and from 1960 on, income is expected to exceed outgo "every year for many years into the future." The advisory council's real worry is that creeping inflation might make the payments worth disappointingly little by the time a young wage earner gets around to harvesting his share at age 65. "The social security system," warned the council, "has created for millions of Americans expectations regarding their future place in economic society. The defeat of beneficiaries' expectations through inflation would gravely imperil the stability of our social, political and economic institutions."