When President Franklin D. Roosevelt signed the Social Security Bill into law on August 14, 1935, he could hardly have predicted that it would end up being one of the most successful anti-poverty programs ever created within the U.S. Without Social Security benefits, 21.7 million more Americans would currently be below the poverty line according to the Center on Budget and Policy Priorities. ​And Social Security does more than provide retirees with monthly payments. It provides ongoing income to surviving spouses and their children as well as disabled workers and their families through SSDI (Social Security Disability Insurance). Among elderly beneficiaries, 37% of men and 42% of women depend on Social Security for 50% or more of their income while 12% of elderly men and 15% of elderly women depend on Social Security for 90% or more of their income. But the viability of the program is uncertain and future generations may pay the price.  FirstLantic, a company dedicated to senior healthcare in South Florida, offers some possible solutions.


How did problems arise?


The U.S. is the richest country in the world so how can the budget be running out. ​​Well, demographics are part of the problem. Boomers have massively contributed to the economy but 70 million of them will be eligible for benefits by 2034 which is more than double the beneficiaries in 1985. ​​And as life expectancies continue to increase, that means many workers will receive benefits for a much longer time. The hardworking boomer generation helped the Social Security OASDI trust funds grow to a peak of over $2.9 trillion. But with boomers retiring, that means fewer workers feeding into the system.  Combine that with a declining birth rate and you have a problem. In 1955, there were more than eight workers supporting each Social Security beneficiary. Now there are 2.7 workers per beneficiary.​​ In addition, as the wealth gap has increased, many workers are paying less into the system because their wages are lower.  And because the payroll tax caps out at a certain income, the social security fund is not able to tap into additional funds from higher wage earners to make up the differential.   At this rate, the fund will be depleted by 2034.



Possible solutions for saving social security.


  • Increasing or removing the earnings cap. The maximum earnings subject to Social Security taxes will increase to $155,100 in 2023. (The cap was $127,200 in 2017.) But rather than incrementally increasing it, Congress may need to pull the band-aid off and remove the cap completely.


  • Raise the retirement age.  Taking a portion of Social Security benefits at age 62 could be raised to age 65 instead.  And the official retirement age could be increased to 70.


  • Broaden the base of people paying into the system. Not all state or local employees are covered by Social Security. Some have only public pension coverage. Bringing all newly hired state and local workers into the Social Security system would create a large new influx of cash, but would also mean more beneficiaries to pay in the future. ​​


  • Broaden the definition of income. ​​Certain forms of income are not subject to SSA payroll taxes such as investments and the value of​employer-sponsored group health insurance. However, eliminating those exclusions would only keep the trust funds healthy for roughly four additional years.


  • Means testing. ​​This would mean adjusting the size of your Social Security payments based on your wages, wealth, or income. The concept is to protect people below a certain annual income or wage level so they get full benefits; those who are financially healthier would sacrifice some or all of their Social Security payments. ​​


  • Cut benefits for new recipients.​​ Pay newly eligible retirees a little less per month. By cutting payments to new retirees by 3 percent, the life of the trust fund could be extended by 10 years.


  • Reduce the cost-of-living adjustment (COLA). ​​Each year, the SSA usually adjusts beneficiary payments to account for inflation based on the government’s Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.  This index takes into account the price increases of everything from rent, groceries, electricity etc.  Proposals have been made to switch to different inflation measures, or reduce or remove the COLA completely.


  • Change benefit calculations. ​Adjusting the complex formulas used to determine your Social Security payments could result in modestly lower benefits that could help increase the life of the trust funds. Here’s an example: The SSA uses your highest 35 years of salary history to determine your retirement benefit. Using a higher number of years, such as 38 or 40, would reduce a beneficiary’s average annual earnings and, as a result, the size of his or her monthly benefit. ​




While nearly 96% of Americans want to see Social Security benefits remain in effect, some tough choices will need to be made to keep the program solvent.  Unfortunately, none of the proposed solutions are likely to be popular.  However, the alternative is that future generations will lose social security completely so some sacrifices will be required to prevent that scenario.


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