To Fix Social Security, We Face Tough Choices
“Unless we act now,” President Jimmy Carter warned in 1977, Social Security’s retirement trust fund will run out of money in 1983. That statement triggered several reforms that put the program on a firmer footing.
Social Security is once again nearing a critical point. The day of reckoning is expected to come in 2033 if nothing is done to repair its finances. Retirees’ benefits would have to be cut by 21 percent, according to the agency’s May report on the trust fund’s fiscal status.
In this NewsHour video, Alicia Munnell, director of the Center for Retirement Research, which publishes this blog, says reform is long overdue and discusses options for repairing the program. The changes required aren’t complicated but will require tradeoffs.
Past changes to restore Social Security’s fiscal soundness included higher taxes and benefit cuts. In December 1977, President Carter signed legislation that included an increase in the payroll tax. In 1983, Congress made other significant changes, including on the benefits side, by increasing the age at which retirees can collect their full benefit. Retirees who sign up for benefits prior to their full retirement age under the program receive smaller checks every month.
Once again, fixing Social Security will require Congress – and all of us – to make some tough choices to repair a program retirees rely on.
Squared Away writer Kim Blanton invites you to follow us @SquaredAwayBC on X, formerly known as Twitter. To stay current on our blog, join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.
One low hanging piece of fruit to grab is to eliminate the “spousal benefit” for spouses who had little no work history within SSA peramiters. They probably did not work because they didn’t need to. They did not materially contribute to the fund and there is no reason they should reap benefits. Note, I am not referring to spousal surviver benefits.
Just a clarification: The 1977 reforms, while not a “forever” solution, cut the long-term deficit by two-thirds and were forecast to last about 50 years. The program was expected to run a cash surplus starting in 1980. See https://www.ssa.gov/policy/docs/ssb/v41n3/v41n3p3.pdf. The need for further action by 1983 was not anticipated at that time. But the sharp and severe recession hammered the system’s finances and forced further action in 1983. Those two packages, 1977 and 1983, really were two separate events.
I would say look to Canada and the way they fund the OAS and other pensioner schemes. They are not in danger of going bankrupt. Everyone pays in. That is the way it should be here. Those who make more, do not notice the sacrifice and will have well-funded retirements anyway. One person needs Social Security to put food on the table and buy medication, another wealthier person uses it for fees at the Gulf Course and Country Club. Just because a person makes less money does not mean they do not work hard for their benefits. Usually they work harder.
You are correct in stating that reform requires tough choices. However, the choices are not increased taxation and/or cuts in benefits, but to consider reforming the entire model of Social Security. This, though, will require certain concessions on all parties involved and will require decision makers to think outside of the proverbial box.
Ah yes, the same nonsense talk of austerity. The fixes for SS are relatively easy: eliminate the income cap on SS tax and tax capital gains and wealth.