The United States Is Not the Only Country Struggling with Social Security Solvency
You may have seen stories in the news recently about a proposal in France to raise the retirement age for government pension from 62 to 64. President Emmanuel Macron’s plan has been met with opposition from French workers. According to AP News, government leaders say the reform is necessary to keep the pension system solvent as France’s life expectancy has grown and birth rates have declined.
To understand why France is considering raising the retirement age, it’s important to understand how their pension system works. An article in Forbes explains, unlike in the U.S. where Social Security is funded by a 12.4 percent tax on employees’ wages (up to a maximum salary of $160,200), “France levies a payroll tax of nearly 28 percent, but it applies only up to about $54,000 in earnings.” Benefits in France are also higher. The article states that pension benefits are equal to about 60 percent of the average workers’ wages.
Saving Social Security Solvency
The protests happening in France should be a wake-up call to U.S. lawmakers. They need to act swiftly to shore up Social Security solvency before we get to a place where they must make a drastic change, like the two-year retirement age jump proposed by President Macron.
The Seniors Trust believes the answer is to enact the Social Security Expansion Act. This landmark piece of legislation will strengthen and expand Social Security for current and future generations, extending its solvency for the next 75 years.
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.
• Minimum Social Security benefits would be increased to provide higher payments to seniors and greatly reduce senior poverty.
• Enhanced benefits would be set to greatly reduce senior poverty and guarantee the long-term solvency of the Social Security program.
