Eight Ways to Fix the Social Security Solvency Problem
More than 50 million American retirees receive Social Security each year. For many of them, it’s their sole source of retirement income. That’s why the pending deficit is so scary.
According to an article by USA Today, Social Security faces a funding shortfall as soon as 2032. If Congress does not act, retirees could see a 28% cut in monthly benefits.
Fortunately, there is still plenty of time to fix the Social Security solvency problem and plenty of solutions are available. The article described eight popular proposals to close the funding gap:
- Raise the cap on income taxed for Social Security
- Remove the income cap
- Increase the payroll tax rate
- Extend the payroll tax to health benefits
- Raise the Social Security retirement age
- Index retirement age to life expectancy
- Slow benefit growth for higher earners
- Cap Social Security benefits
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.
