Insolvency is Not an Option! Here Are Four Ways to Shore Up Social Security

The latest Social Security Trustees’ Report says that the trust fund that supports the critical program millions of seniors rely on could be depleted in less than seven years. A NewsNation article says should that happen, “retirees would face a 22 percent benefit cut, lowering the average monthly retirement check by roughly $450 based on current figures.”

The shortfall is caused by Americans living longer and fewer workers paying into the program to support a growing number of retirees. Since that is not going to change in the near future, lawmakers need to come up with a plan to shore up Social Security now.

The article says there are four options:

Raise or eliminate the Social Security tax cap. Raising the cap, or eliminating it, would generate additional revenue by requiring higher earners to pay Social Security taxes on more of their income.

Increase the Social Security payroll tax rate. Although unpopular with workers, even a small increase in payroll taxes “could generate significant revenue and would be relatively straightforward to administer.”

Raise the full retirement age. The article notes that supporters of this plan believe “raising the retirement age would help account for longer life expectancies and the growing number of years Americans spend in retirement.”

Change how COLAs are calculated. Changing the formula used to calculate inflation increases could result in slower growth in benefits over time. NewsNation reports one idea is to “switch to the Chained Consumer Price Index, which is designed to account for substitution across categories, like when consumers buy chicken because beef becomes more expensive.”

A Better Answer

The Seniors Trust believes the best solution to solving the Social Security solvency issue is The Social Security Expansion Act. This landmark bill buttresses the long-term solvency of Social Security by expanding benefits for seniors – not cutting them – and not making seniors work more.

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.