Social Security: 7 Things The Government Must Do to Protect Benefits
Written by
Nicole Spector
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It’s hard for retirees to get by on Social Security money alone, but you know what’s even harder? Being a retiree with even less Social Security money than what is being distributed by the government now.
Unfortunately, at the rate we’re going now, without major reforms enacted, Social Security beneficiaries could each face, on average, a cut of 20% on benefits in 2034, when the combined Social Security reserves are due to be depleted.
To salvage and protect Social Security, the government must take urgent notice and make a number of moves sooner than later. But it won’t be simple.
“Protecting Social Security benefits is a multifaceted issue that demands both innovative thought and a commitment to action,” said Brandy Burch, CEO at Benefitbay.
Adjust the Retirement Age
Pretty much nobody wants to have to spend more years working at full speed, particularly not in their golden years – but pushing back the retirement age could be a necessary move to save Social Security benefits for future retirees.
“A gradual adjustment in the retirement age seems like a pragmatic step, reflecting our extended work lives and increased longevity,” Burch said. “This change, if communicated with clarity and implemented with foresight, can be a cornerstone in sustaining the Social Security system for future generations.”
Making Changes So Lower Income Earners Get More
One way to protect Social Security is to provide more money a month to support lower income people, while decreasing benefits for higher income earners.
“Tweaking how benefits are calculated to favor lower earners could help make Social Security more progressive and sustainable. This might mean slightly lower benefits for higher earners but could ensure that those who need it most get enough support.”
Revisit the Payroll Tax Cap
Burch also thinks that revisiting the payroll tax cap to potentially increase contributions from higher earners could introduce a much-needed layer of equity into the funding equation,” Burch said.
Martha Shedden, president and co-founder at the National Association of Registered Social Security Analysts also thinks the maximum tax earnings limit should be adjusted.
“Raise or eliminate the maximum taxable earnings limit (currently $168,600) either with or without an increase in benefits for those high earners,” Shedden said. “Since 1975, the tax max has generally increased at the same rate as average wages each year. Increasing the tax max beyond wage-indexed levels to help restore financial balance and to reflect growing earnings inequality, as workers earning more than the tax max have experienced higher earnings growth rates than other workers in recent decades.”
Promote Financial Literacy
Interestingly, promoting and nurturing financial literacy is also necessary to save Social Security.
“Empowering individuals with the knowledge to make informed decisions about retirement planning can alleviate some of the pressures on the Social Security system,” Burch said. “This goes hand-in-hand with a call for bipartisan cooperation — our collective future hinges on our ability to collaboratively find and implement long-term solutions. The challenges facing Social Security are neither Democratic nor Republican issues; they are American issues.”
Be Open-Minded and United
“As we look ahead, it’s imperative that we approach these challenges with an open mind and a commitment to the common good,” Burch said. “It’s from this place of understanding and unity that we’ll be able to secure the future of Social Security for the coming generations.”
Politicians Need to Really Listen – and Speak Up
“Politicians should stop pretending that they are protecting Social Security by doing nothing,” said James B. Lockhart III, former leader of four critical government agencies.
“They should tell the American people that in nine years all their and future generations’ Social Security retirement and survivor benefits will be cut by 23%,” Lockhart said. “To continue paying promised benefits, it would add over half a trillion dollars to the U.S. government’s already annual $2 trillion annual deficits.”
But politicians are, in Lockhart’s view, afraid to touch the “third rail of American politics.”
“There are proposals in both the Senate and House, to create a bipartisan, bicameral Fiscal Commission to propose changes to Social Security and other entitlement programs,” Lockhart said. “The last major reforms were based on the Greenspan Commission in 1983. It will be tough to reach a consensus, but one way to reduce the politics is to have the Commission’s proposals subject to only a Congressional up or down vote.”
Keep the Goals and Purpose of Social Security in Mind
The government needs to make significant changes to get Social Security in a good place, and to do so, they need to keep the purpose and goal of the critical program top of mind.
“The goal of any Social Security reform should be a balanced plan which addresses both revenues and benefits,” Lockhart said. “The Bipartisan Policy Center’s Commission on Retirement Security Report is a good blueprint for such a plan to save Social Security for present and future retirees.”
