The Social Security Conundrum - 247wallst.com
It should be no secret to anyone who stays abreast of the news these days, Social Security – the nation’s primary program to avoid poverty in our senior years – will soon be facing a financial crisis! According to the Trustees of Social Security, incoming revenue is (and has been for a few years) insufficient to pay all benefit obligations. As a result, reserves held in Social Security’s Trust Funds are being used to pay full benefits to all beneficiaries. But here is the problem:
The financial reserves held in the SS Trust Funds (about $2.7 trillion as of the end of 2024), are being depleted at a rapidly increasing rate, which will result in those reserves being fully depleted in about seven years (2033). And if that happens, everyone’s Social Security benefit will be cut by about 23%. And that is not a comforting outlook, because it would throw nearly 22 million more people into poverty. But that doesn’t need to happen.
What’s needed is for Congress (and the Executive Branch) to develop a reform program to restore Social Security to financial solvency. Fact is, Congress has known about this issue for decades, but has, unfortunately, neglected to act. Which puts us where we are today – against a proverbial wall facing a Social Security benefit cut in just a few years! It’s time for Congress to get serious about reforming the Social Security program, as this 247wallst.com article by Douglas McIntyre explains. There are numerous suggestions on what reform should look like, as mentioned in the article. And the Association of Mature American Citizens (AMAC) – a large senior advocacy organization – has offered a common sense solution as well.
As an example of leading thinking on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized to serve future generations. AMAC’s position is that this can be achieved without payroll tax increases through relatively minor program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating initial benefits for 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) changing the taxable maximum formula to address the unintended loss of revenue; (4) improving survivor benefits, (5) eliminating the reduction in benefits for those choosing to work before full retirement age; and (6) improving savings tools for future retirees, including a savings account that builds estate value. 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. See AMAC’s proposal for Social Security reform here.