7 Benefit Adjustments That Could Help Save Social Security
Americans who fear for the future of the Social Security program have a number of good reasons to do so, starting with the simple fact that the primary trust fund used to pay retirement benefits is set to become depleted as soon as 2033.
However, as stressed by Social Security experts including Marcia Mantell and Martha Shedden, there are also reasons for a measure of tranquility, including the realization that the Social Security program isn’t actually going “bankrupt,” as media reports and pundits commonly suggest.
The reality is that, barring congressional action, the main Old-Age and Survivors Insurance Trust Fund will indeed run dry sometime in the mid-2030s, but ongoing payroll tax revenue expected to be collected at that time will still fund between 75% and 80% of scheduled Social Security benefits. A 25% benefit cut will obviously hurt, Mantell and Shedden agree, but it’s a far cry from Social Security simply disappearing overnight.
The other good news is that, as noted in a recent report published by the American Academy of Actuaries, the U.S. Congress has a wide range of options to address the Social Security funding crunch — including some reforms that could be implemented immediately and phased in gradually.
According to the academy’s policy experts, if Congress has not acted by 2034, Americans will be faced with an automatic 20% cut in payments to people already receiving benefits, as well as the need to immediately increase Social Security taxes by 25%.
As they stress in the new report, earlier reform action would allow for tax increases and benefit reductions to be phased in gradually. Not only would this help to reduce the cumulative pain of the effort to “save” Social Security, the authors posit, it would also provide individuals more time to plan and adjust to the changes.
See the accompanying slideshow for a list of benefit-side adjustments that, if implemented soon and gradually, could help put the Social Security program on a solid financial footing for decades. Notably, many of the specific reform options would themselves have a modest impact, suggesting that a multi-pronged approach will be needed to address Social Security’s funding woes.