Imagine No Social Security - AMAC Foundation
In 1971, the iconic song writer Jon Lennon penned the lyrics to his famous song “Imagine,” asking us to picture a world in total peace and harmony. Although it was a call to imagine what life would be like in a utopian world, it was also, perhaps, overly optimistic given the realities of that time – realities which are largely similar today, over 5 decades later.
Nevertheless, it is always good to imagine life as it might be. And that goes both ways – we can and should always picture life in a better world, but we might also take pause, at times, to picture how life might be worse. How often have we lamented that “things could be much worse?” when confronting adversity in our daily lives? So, today I’d like to suggest that you picture what life would be like without Social Security.
First Some Statistics
First, some statistics: Social Security provides benefits to about 70 million Americans, senior citizens as well as those not yet old enough to be so designated. That’s about 20% of the entire U.S. population. The benefits offered are financial, providing usually crucial money to those fortunate enough to be eligible. That includes those who have earned benefits by working and are old enough to claim, and others – such as minor or disabled adult children – who have not personally earned a benefit but are dependent on a parent who has. Benefits are also available for dependent spouses, ex-spouses and, sometimes, dependent parents. And let’s not forget that even working Americans who become disabled often find financial relief at a younger age with the Social Security disability insurance program. Fact is, Social Security provides a “major” source of income for a majority of senior Americans and, in most cases, those collecting say it is critical to their ability to make their financial ends meet. In a nutshell, a large majority of Social Security recipients say Social Security is critically important to their financial well-being. But what if Social Security were to go away?
What If Social Security Went Away?
Well, that’s not something we like to think about because it would negatively impact so many millions of people. Senior citizens would suffer harshly because the poverty rate for those aged 65 and over would jump from around 10% to nearly 40%.That means another 22 million people would be added to the total 36 million who already live below the U.S. poverty line. And statistically, the ones most affected would be older women, people of color, and children (about 4 million of whom receive Social Security benefits). Another 9 million or so Americans who collect Social Security Disability Insurance benefits would also be seriously affected.
What would American life be like without Social Security? As a student of U.S. history, I can imagine what it was like in the 1930s – the decade of the so-called “Great Depression.” The years immediately preceding the advent of FDR’s Social Security program were a time of abject poverty in the United States. Many Americans had very little money and scant resources, with men wandering from town to town to find work to provide food for their kitchen table. Many wore tattered clothing, often the only clothes they had, and minor children had to work (if they could) to help the family survive. That was the environment which gave birth to the U.S. Social Security program. And the program, funded by taxes on workers and their employers, worked well. Starting when monthly SS benefits began flowing in 1940, Social Security has continued to sustain America’s seniors and their dependents for about 90 years. In other words, Social Security is an extremely effective anti-poverty program which, if eliminated, would devastate millions. But what are the chances that Social Security will actually go away?
Will Social Security Ever Go Away?
You might have heard that Social Security is now having some financial difficulties – and that is true. But is it in danger of every going away completely? The answer to that is a resounding “No.” Despite its current financial dilemma, Social Security will never go away completely. As long as Americans are working and contributing to the program, it will always be here to provide some benefits. But the more important question is, will Social Security be able to pay for all of its benefit obligations in the future? And the answer to that is “No, unless Congress acts soon to reform the program.” You see, right now Social Security revenue (mainly income from working Americans) is less than needed to pay all benefit obligations. Social Security revenue in 2024 was about $1.418 trillion, but SS expenses were about $1.485 trillion – a deficit of about $67 billion. And that shortfall has been taken from Social Security’s Trust Fund reserves in order for full benefits to be paid to everyone.
The Social Security Trust Funds have supplemented the money needed to pay full benefits since 2021, which means the reserves in the Trust Funds have gone from about $2.9 trillion in 2020 to about $2.7 trillion today – a trend that will result in the reserves being completely depleted in about the year 2033 (this according to the Trustees of the Social Security program). If the Trust Fund reserves are fully depleted, Social Security can only pay out in benefits what it receives in revenue, which would mean about a 23% cut in benefits for every Social Security recipient.
Since so many Americans rely on Social Security as a major contributor to their financial well-being, the result of a 23% cut to everyone’s Social Security income would be devastating. It likely wouldn’t make things as bad as they were in the 1930s preceding Social Security’s birth, but it would nevertheless present a very serious problem which would thrust many more Americans into poverty. And that is the crux of the Social Security dilemma – cutting everyone’s SS benefit to only 77% of what is now received would mean a return to high levels of American poverty.
But it doesn’t need to happen.
Fixing Social Security
Congress has been aware of this looming Social Security issue for several decades but has chosen to “kick the can down the road.” Now, there is little time remaining to fix the problem. We are only a short 7 years away from when the SS Trust Funds will no longer have money to supplement Social Security benefit payments. Therefore, Congress must act soon to restore this crucial program to financial solvency. And the longer it waits, the more difficult the problem will be to solve. Indeed, Congress, instead, recently exacerbated Social Security’s financial dilemma by passing legislation which provided additional benefits to a segment of beneficiaries (see H.R. 82 – The Social Security Fairness Act). Regardless of the merits of that recent legislation, it added about $200 billion to Social Security’s expenses over the coming decade, at a time when Congress should be seeking ways to reduce Social Security’s costs.
For its part, the Association of Mature American Citizens (AMAC) recognized this looming Social Security issue years ago and developed a potential Social Security reform proposal. AMAC has promoted (and continues to promote) its Social Security Guarantee to Congress and, in fact, also to the new Commissioner of Social Security. AMAC’s proposal provides common sense adjustments to the Social Security program – program adjustments which retain the poverty-reduction aspects of Social Security while still providing the full benefits all have earned from a lifetime of working. You can see a summary of AMAC’s Social Security Guarantee proposal here.
In any event, now is the time to mobilize by contacting your Congressional Representatives to demand that Congress take action to reform the Social Security program and restore it to financial solvency. The year 2033, when everyone’s Social Security benefit will be cut by almost 25%, is just around the corner! Just imagine the consequences of that!!