Why Social Security Solvency is a Serious Concern
Almost three out of four Americans share the same fear — and it’s not spiders! A report by Kiplinger Personal Finance shows that the majority of Americans fear Social Security will not be there for them when they retire. This is from Bankrate’s latest Social Security Survey.
The Social Security trust fund is projected to be depleted by 2033. At that time, it will only be able to pay 79 percent of the expected benefits. This means recipients could face a 21 percent benefit cut. This is very concerning because more than three-quarters (77 percent) of current retirees rely on Social Security to pay their necessary expenses.
Should you be concerned?
The survey found that overall 43 percent of people questioned were very concerned about Social Security’s solvency. Of those already retired, 49 percent were very concerned, while 42 percent of non-retired adults were worried.
It’s important to know that Social Security is not going bankrupt. As long as there are still people working — and paying income tax — Social Security is being funded. The problem is that retirees outnumber people still working so the trust fund is being depleted faster than it is being restored.
What does the future hold?
As the article states, “While the future of Social Security is more worrisome to people who count on it as their main source of income, Congress could take action and increase funding to Social Security by raising taxes, reducing retirement benefits, or both.”
The solvency solution
The Seniors Trust stands behind the Social Security Expansion Act introduced by U.S. Sen. Bernie Sanders (I-Vt.). Not only will this landmark piece of legislation ensure the long-term solvency of Social Security, but it will also provide seniors with bigger benefits.
Under this bill, seniors would receive an extra $2,400 in benefits each year. In addition, it would recalculate the way the Social Security cost-of-living-adjustment (COLA) is calculated, using the Consumer Price Index for the Elderly (CPI-E) instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-E more accurately reflects the actual spending of seniors, which tends to be on expenses such as healthcare and housing.
To fund the proposed benefits boost and maintain solvency far into the future, the Social Security Expansion Act calls for applying the Social Security payroll tax on all income above $250,000. Currently, earnings above $176,100 aren’t subject to the Social Security tax.
If enacted, the Social Security Expansion Act could keep Social Security solvent for about 75 years!
