Senators are Starting to Look for New Ways to Fund Social Security for the Future
Social Security is facing a severe funding shortage. If nothing is done, its trust fund will run out in less than 10 years, which would mean drastic cuts to benefits. According to an article in Newsweek, a bipartisan pair of U.S. senators think they have found a solution to the insolvency crisis.
In an op-ed piece for The Washington Post, Republican Senator Bill Cassidy of Louisiana and Democratic Senator Tim Kaine of Virginia suggested an alternative funding model, which would supplement the program’s Trust Fund with a new diversified pool of investments in “stocks, bonds and other investments that generate a higher rate of return, helping keep the program from running dry.”
The Newsweek article states that “senators estimate that the fund would require an up-front federal investment of $1.5 trillion, and propose that it be given 75 years to grow.” This concept of investing in stocks and such is not unique. The lawmakers pointed out that many other countries use similar strategies to fund their retirement programs.
It’s important to point out that Senators Cassidy and Kaine have not yet formally submitted their plan for Congressional consideration. However, there is a viable solution to securing Social Security’s solvency already before lawmakers.
A Better Solvency Solution
The Social Security Expansion Act, sponsored by Sen. Bernie Sanders (I-VT), Sen. Elizabeth Warren (D-MA) and Rep. Jan Schakowsky (D-IL), would increase benefits by $200 per month across the board; update and increase the minimum benefit to 125 percent of poverty, to ensure that no one retires into poverty after a lifetime of work; and switch to the more accurate consumer price index for the elderly (CPI-E), that more accurately reflects seniors’ spending.
Additionally, this legislation would ensure that all benefits will be paid in full and on time for the next 75 years and beyond by requiring those with incomes of $250,000 or more to pay into Social Security on all of their income, earned and unearned, above that $250,000 threshold.
The Seniors Trust is dedicated to ensuring passage of the Social Security Expansion Act. We believe this landmark piece of legislation is essential for the financial future of American retirees. It seeks to reform Social Security the right way: by expanding and strengthening benefits proven to reduce senior poverty and improve retirement security, as well as extending the solvency of this crucial program.
