No, the end of Social Security is not foreseen…but there is rough water ahead. - Fool.com
A literary comment often attributed to Mark Twain pretty much sums up the theme of many media articles about Social Security. You’ve probably heard it: “The report of my death was an exaggeration.” So goes the popular notion that Social Security is heading off a cliff and benefits will stop in just a few years. Anything beyond a superficial reading of uninformed “reports” or unsubstantiated social media posts will lead you to realize our Social Security program–the mechanism that keeps millions of beneficiaries above the poverty line–is not ending, despite its steadily worsening financial trajectory.
A fool.com post by The Motley Fool’s Sean Williams tackles the myth of Social Security’s impending implosion, labeling it “a very resounding no.” Williams amplifies this assertion with this broad statement: “If you qualify for a retirement benefit, Social Security will absolutely be there for you. What remains to be seen is if the existing payout schedule, including COLAs, can be sustained beyond 2033, or if some level of sweeping cuts will be needed.” To develop his premise, Williams reviews the long-term funding problem (a $23 trillion shortfall) facing the program and highlights the primary factors contributing to the problem, following that with an explanation of the revenue sources that will keep Social Security afloat — at least at some level.
The Road Forward?
Williams’ article, which can be read in full here, also explores the ongoing debates on the best long-term solution for Social Security, noting that inaction on proposals presented in Washington for consideration has contributed to the problem. Hundreds of recommendations have been submitted for actuarial evaluation over the past few decades, with no progress toward a solution. 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 to meet the demands of 21st-century economics. AMAC’s position is that this can be achieved without payroll tax increases through relatively slight program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating payments to higher-income beneficiaries. Changes to the age for maximizing benefits are included in AMAC’s position, along with (1) an increase in the thresholds where benefits are subject to income tax; (2) indexing of these thresholds annually to account for inflation; (3) improved survivor benefits, (4) eliminating the reduction in benefits for those choosing to work before full retirement age; and (5) improved savings tools for future retirees, including a savings account that builds estate value. AMAC is resolute in its mission to preserve Social Security for current and future generations and has garnered the attention of lawmakers in D.C., meeting with numerous congressional offices and staff over the past decade.