Why Attaining Social Security Solvency Will Not Be Easy
Social Security as we know it is about to change. It has been running a cash-flow deficit since 2010 and all indications are that its trust fund (which currently holds $2.7 trillion) will be completely drained by 2033. When that happens, Social Security will have no choice but to cut benefits. It has to — it’s the law, explains an article by The Conversation.
Obviously, no one wants to see benefits cut, especially because so many older Americans rely on Social Security for the majority of their retirement income. The alternative, raising taxes, is not popular either. But the problem is that Social Security is funded by payroll taxes and with so many Baby Boomers retiring, the younger workforce is not large enough to make up the deficit to replenish the trust fund.
One thing is certain, if lawmakers do not act soon Social Security will be insolvent.
Our Favored Solution
The Seniors Trust stands behind the Social Security Expansion Act introduced by U.S. Sen. Bernie Sanders (I-Vt.). Not only does it 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 $160,200 aren’t subject to the Social Security tax.
If enacted, the Social Security Expansion Act could keep Social Security solvent for about 75 years.
Show Your Support
The Seniors Trust believes the Social Security Expansion Act 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.
Please, sign our petition to Congress and join us as we strive to improve the lives of senior citizens.
