Right here we go once more. One other spherical of scare tales in regards to the impending doom of Social Security. Headlines, comparable to this one in my native newspaper – “Social Security Strikes Nearer to Chapter” – have lots of my readers on edge.
These sorts of headlines have been prompted by a report launched final week from the Social Security Board of Trustees that mentioned the nation’s bedrock social insurance coverage program is one 12 months nearer to insolvency. It mentioned that if no adjustments are made to this system by 2034, the system could be unable to pay full advantages. That’s one 12 months sooner than the 2035 date in final 12 months’s report.
My emails clearly point out that information has lots of my readers saying, “Oh my God, what can we do now?” However frankly, it’s received me saying, “Ho-hum. Been there, performed that!” With out making an attempt to be too flippant, let me clarify.
My hunch is that the majority senior residents studying this column have been being attentive to Social Security points for the final 10 years – possibly 20 on the most. However I’ve been being attentive to Social Security for the final 50 years. I’m additionally a reasonably good pupil of its whole 80-year historical past. I can’t even start to rely what number of headlines I’ve seen through the years that predicted Social Security’s chapter. In fact, not a single one among them has ever come true. These newest headlines gained’t come true both.
Why? Simply return to the trustee’s report. You’ll word it says the system faces insolvency “if no adjustments are made to this system by 2034.” Right here is the deal. Congress will implement Social Security reforms lengthy earlier than we get to 2034. Anybody who is aware of Social Security historical past is aware of we’ve been down this highway many instances earlier than. The final time was in 1983, when the system was simply 5 years away from insolvency. Then-President Ronald Reagan shaped the Nationwide Fee on Social Security Reform and Congress applied lots of their proposals (like growing the total retirement age).
So, someday within the not-too-distant future, we’ll possible see one other such Social Security reform fee. How will they modify Social Security? Listed under are eight generally talked about reforms. 4 contain reducing advantages and 4 take care of elevating revenues. Subsequent to every is a quantity expressed as a share. The quantity signifies the portion of Social Security’s long-range deficit that may be eradicated if the proposal turned legislation. Additionally listed is a quick argument for and towards every proposal.
So, why not see in the event you can “save Social Security”? If you will discover options totaling 100% or extra, you’ve saved the system solvent for future generations!
Proposals that would scale back advantages
No. 1: Increase the retirement age to 70 by 2060 – a 68% repair.
Q: Why is that this a good suggestion? A: Individuals are residing longer, more healthy lives and with sufficient lead time, they might have the ability to plan for the delay in receipt of their advantages.
Q: Why is that this a nasty concept? A: Would you actually need to work till you might be 70 years previous? Employers will likely be confronted with increased well being care prices for older staff.
No. 2: Scale back value of residing changes (COLAs) paid to Social Security beneficiaries by one-half of 1% – a 25% repair.
Q: Why is that this a good suggestion? A: Economists imagine the present formulation over-states inflation for older adults.
Q: Why is that this a nasty concept? A: I’ve by no means met one older grownup who believes the economists. Additionally, COLA reductions are cumulative. The longer you reside, the extra you’ll endure financially.
No. 3: Scale back advantages by 5% for all future retirees – a 35% repair.
Q: Why is that this a good suggestion? A: All retirees ought to share duty for shoring up Social Security.
Q: Why is that this a nasty concept? A: Decrease-income beneficiaries couldn’t afford the discount.
No. 4: Means check – cut back advantages to these making greater than $100,000 – a 50% repair.
Q: Why is that this a good suggestion? A: Ensures Social Security is paid solely to individuals who want it essentially the most.
Q: Why is that this a nasty concept? A: Would flip Social Security right into a welfare program.
Proposals that may increase revenues
No. 1: Increase Social Security payroll tax by one-half of 1% – a 53% repair.
Q: Why is that this a good suggestion? A: The Social Security tax has not been elevated in 40 years. This could be a modest value to pay for long-range Social Security stability.
Q: Why is that this a nasty concept? A: Further tax burden would discourage financial savings and funding.
No. 2: Tax all earnings (present payroll tax base is $142,800) – a 73% repair.
Q: Why is that this a good suggestion? A: It impacts solely higher-income individuals who can afford it.
Q: Why is that this a nasty concept? A: It might be an enormous tax burden for rich folks.
No. 3: Make of us pay earnings tax on all Social Security advantages (at present solely a portion is taxed) – a 16% repair.
Q: Why is that this a good suggestion? A: All different pensions are absolutely taxed.
Q: Why is that this a nasty concept? A: It might possible influence middle-income taxpayers essentially the most.
No. 4: Require all state/native authorities staff pay into Social Security – an 11% repair.
Q: Why is that this a good suggestion? A: All working Individuals ought to pay for Social Security.
Q: Why is that this a nasty concept? A: Would jeopardize many well-run authorities worker pension plans.
Keep in mind, these are simply eight of a whole lot of concepts for Social Security reform. So, my bottom-line message is that this: Don’t fear. Social Security will likely be reformed lengthy earlier than the system goes stomach up!
When you’ve got a Social Security query, Tom Margenau has a ebook with all of the solutions. It’s referred to as Social Security – Easy and Good. You could find the ebook at www.creators.com/books. Or search for it on Amazon or different ebook shops. To search out out extra about Tom Margenau and to learn previous columns, go to the Creators Syndicate web site at www.creators.com.