Let’s Look at a New Proposal to Shore Up Social Security

Social Security is facing a severe funding shortage. If nothing is done, benefits will be slashed by over 20 percent in just a few years. According to a report by CBS News, a new proposal could help avoid insolvency.

An analysis by the Committee for a Responsible Federal Budget (CRFB), a nonpartisan think tank focused on fiscal and budgetary issues, found that “about 1 million individual Social Security beneficiaries receive at least $50,000 in annual payments, or more than $100,000 for a retired couple.” By capping Social Security payments at those levels, the United States would “save as much as $190 billion over a decade and close at least 20% of the program’s solvency gap.”

According to the Social Security Administration, the average retired worker receives $2,071 each month in benefits. By comparison, the CRFB found that the maximum-earning couple receives about $8,416 in monthly payments.

The article explains that the CRFB proposal “suggests indexing the $100,000 benefit threshold either to inflation or by using wages as a peg. That would guard against middle- and low-income households being affected by the proposed cap as the Social Security Administration issues cost-of-living increases.”

A Better Solution

The Seniors Trust believes the best solution to solving the Social Security solvency issue has already been introduced. We want Congress to enact The Social Security Expansion Act. This landmark bill buttresses the long-term solvency of Social Security by expanding benefits for seniors – not cutting them.

If passed, this legislation will make four major changes to Social Security for retirees:

• Benefits will be increased for most recipients by about $200 per month.
• The Consumer Price Index for the Elderly (CPI-E) will be used to calculate Social Security Cost-of-Living Adjustments (COLAs) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes the unique spending habits of seniors into account — particularly regarding the cost of healthcare — and offers a more realistic COLA for retirees.
• The minimum Social Security benefits would be increased to provide higher payments to seniors and greatly reduce senior poverty.
• The long-term solvency of the Social Security program would be guaranteed.