4 Financial Solutions to the Fund’s Problems

In this section, we try to isolate the effects of various financial factors on the Fund’s longevity. We consider the Fund “dead” when its net assets reach zero. The factors considered are investment returns, expenses and cuts to benefits. All other current trends are kept the same. Table 4 shows the results.


Table 4: How changing parameters affect the Fund’s longevity.



Assumption Year the Fund Dies


Investments return 7.5% 2033
Investments return 8.5% 2036
Investments return 9.5% 2037
Zero Expenses 2037
25% Benefit Reduction 2041



As you can see, benefit cuts provide the greatest improvement. Expense reduction, while important, does not provide the improvements most of us hope for. As you can see, using an (obviously hypothetical) expense of zero adds surprisingly little to the Fund’s longevity. Benefit cuts provide the greatest improvement. Of course, in a real scenario, more than one factor will come into play. The point here is to see which ones give us the most “bang”.

You can find charts for each of these scenarios in the appendix on page 88.