A new year is a time for new beginnings. While 2020 certainly had its share of challenges, with a Covid-19 vaccine now in distribution things are looking much brighter for 2021. So perhaps it’s time we focus on some other issues facing this country. Reuters columnist Mark Miller believes fixing Social Security should be high on the list. Here’s a look at his six suggestions to fix America’s retirement program.
- Address Solvency – Miller says Social Security’s long-term solvency was in danger long before the pandemic, but due to the economic downturn and payroll tax cuts things are even worse now. Projections show the Social Security trust fund could be exhausted by 2034. This does not mean Social Security will be broke. It simply means the system is not taking in enough money to pay out all that was promised in benefits. It’s estimated that Social Security will only be able to meet about 80%. However, President-elect Biden campaigned on a plan to address solvency by adding a new tier of payroll taxes for high income earners – those making more than $400,000 a year. If enacted, that plan could provide a much-needed boost to Social Security’s coffers.
- Improve Benefit Adequacy – This could be accomplished by using a better system to calculate Social Security’s annual cost-of-living adjustment (COLA). The Seniors Trust is calling for the Consumer Price Index for the Elderly (CPI-E) to be utilized 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. Miller also recommends crediting caregivers for time spent out of the workforce (this would greatly benefit many retired women) and expanding benefits for women and seniors who had collected payments for 20 years.
- Safely Reopen Field Offices – Most of the Social Security field offices closed due to the pandemic. Once it is safe, Miller says these offices need to reopen to better serve lower-income workers, who are less likely to have online access.
- Use a Better Calculator – There is fear that pandemic-related job losses will threaten the benefits for workers turning 60 this year. Social Security benefits are based on a worker’s earnings history compared to the growth in aggregate wages nationwide. However, those wages are expected to decrease this year due to massive job losses related to Covid-19. The Social Security system wasn’t built to account for anomalies like this. Preliminary estimates show someone who was expecting to receive $2,000 a month in benefits may now see about $120 less. Miller is calling on Congress to enact a system to ensure the aggregate wage calculation cannot decrease benefits for Social Security recipients.
- Fix FICA – As part of an economic stimulus plan to boost the economy during the pandemic, President Trump signed a presidential memorandum in August deferring Federal payroll taxes (FICA) through the end of the year. That money is now coming due. Workers who participated will see a sudden increase in their taxes, meaning less money in their pockets. Miller thinks the new administration should do something to spread out those payments over a period of time.
- Revise Disability Rules – In his column, Miller calls on the government to revise some of the recent rules put into effect which made it tougher for people to file for and receive Social Security disability benefits. He says this is especially important because we have not seen the long-term effects of Covid-19 that may leave some people unable to work in the future and needing disability income from Social Security.
The Seniors Trust supports the passage of legislation which provides bigger benefits and strengthens the long-term solvency of America’s Social Security system. Our mission is to encourage lawmakers to pass the Social Security Expansion Act. This landmark bill seeks to reform Social Security by expanding and strengthening benefits proven to reduce senior poverty and improve retirement security, as well as extend the solvency of this crucial program. You can show your support and call on our representatives to act by signing our petition.