Understanding the Social Security Shortfall and How to Fix It
According to the latest estimates of the Social Security trust fund report, starting in 2033, Social Security will only be able to cover 79 percent of promised benefits. That’s a really scary thought when you consider that one out of every five people in the United States receives Social Security benefits.
EconoFact took a deep dive into the pending Social Security shortfall and found that almost 69 million Americans currently receive Social Security benefits, totaling about $1.6 trillion in benefits to be paid this year.
Retirement benefits account for about 80 percent of all Social Security payments. And things will likely only grow worse as the number of retirees continues to outpace the number of younger working individuals.
A Viable Solution
The Seniors Trust supports the Social Security Expansion Act. 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.
