Will Social Security be around in your future?
January 1, 2018
Will Social Security be in your future? The short answer is “yes.” The other short answer is “maybe.” Let’s start at the beginning.
Who cares if Social Security has a future?
About 61 million people, or more than one in every six U.S. residents, currently collect Social Security benefits. They care.
About 40 percent of Americans age 65 and older would have incomes below the poverty line without Social Security benefits. With Social Security benefits, 9 percent do. They certainly care.
The median retirement account balance is $2,500 for all working-age households, and $14,500 for near-retirement households. They will care.
Perhaps you have heard or read that the Social Security fund is trillions of dollars in debt and going broke, that the government has raided the fund and left it high and dry so that the fund is nothing more than a big pile of IOUs, or that the money won’t be there when today’s younger workers will need it. I know I have been reading too many turn-of-the-century novels, but the words “poppycock” and “balderdash” come to mind.
Every year the Social Security Trustees release a financial report on the economic status of the Social Security Trust Fund. By the way, there are six trustees, and they are all chosen by the president and approved by Congress, so it would be difficult to accuse them of “liberal bias.” Here is what the trustees report in 2017, as summarized by the Center on Budget and Policy Priorities (CBPP):
“The trustees estimate that, if policymakers take no further action, Social Security’s combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust fund reserves will be depleted in 2034... After 2034, Social Security could still pay three-fourths of scheduled benefits using its tax income even if policymakers took no steps to shore up the program. Those who claim that Social Security won’t be around at all when today’s young adults retire and that young workers will receive no benefits either misunderstand or misrepresent the trustees’ projections.”
So much for the “nattering nabobs of negativism” (tip o’ the hat to VP Agnew). However, something does need to be done so that Social Security does not have to reduce benefits after 2034. A few decades ago a similar blip in Social Security finances resulted in the 1983 Amendments to the Social Security Act which instituted a number of effective common-sense reforms. As a result of these changes the Social Security system began to generate needed additional funds. A similar strategy would work now. For example, according to the CBPP,
“Because Social Security benefits are so modest and make up the principal source of income for most beneficiaries, policymakers should restore solvency primarily by increasing Social Security’s tax revenues. Revenues could come from raising the maximum amount of wages subject to the payroll tax... broadening the tax base... and raising the payroll tax rate by small steps.”
Finally, the political “maybe.” According to a recent issue of Newsweek, “Florida Senator Marco Rubio admits that the Republican tax cut plan, which benefits corporations and the wealthy, will require cuts to Social Security and Medicare to pay for it.” In addition, recently and in past years, a number of other prominent conservatives have talked about or alluded to cutting Social Security.
In sum, Social Security finances are sound now and, with relatively minor fixes, into the future. On the other hand, the politics of Social Security are increasingly volatile and threatening. Good time to keep track of political motivations, read the fine print, and put your elected representatives on speed dial.
This is the third of a three-part series on Social Security. Part one discussed the history, and part two discussed the current status of Social Security in Alaska.
Lawrence Weiss is a UAA Professor of Public Health, Emeritus, creator of the UAA Master of Public Health program, and author of several books and numerous articles.