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A Complex Problem: Social Security Solvency - Motley Fool
For over 8 decades, Social Security has been paying earned benefits on time, providing a crucial source of income for eligible Americans. A Social Security payment has never been missed since monthly payments began in 1940, and a payment has never been less than the earned amount. However, that sterling record may be in jeopardy in the not-too-distant future.
According to the Trustees of Social Security, program income now exceeds program expense, with full benefits only being paid by withdrawing from financial reserves. Trouble is, without program reform, those reserves will be depleted in about 2033, at which time everyone’s monthly benefit would shrink by about 23%. The reasons? There are a few, including longer life expectancy of beneficiaries and a large baby boomer population retiring. These result in an ever growing population of beneficiaries collecting benefits for a longer period of time. Add in the issue of the declining rate of worker-age legal immigrants and the ever-declining U.S. birthrate yielding fewer in the workforce, and the problem becomes obvious – the number of beneficiaries is growing faster than the number of workers contributing to the program. And that means the program, as currently designed, is unsustainable over the long term.
The fact is, though, that all of these issues are solvable by Congress, if they can put aside partisanship and work together toward Social Security reform. This Motley Fool article by Sean Williams defines the problem and places responsibility for fixing it where it rightly belongs – in Congress’s lap.
As an example of the leading thoughts on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized. This can be achieved without tax increases by slight modifications to cost of living adjustments and payments to high income beneficiaries plus gradually increasing the full (but not early) retirement age. AMAC Action, AMAC’s advocacy arm, supports raising the thresholds at which benefits are taxed and then indexing for inflation, and calls for eliminating the reduction in people’s benefits for those choosing to work before full retirement age. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade.