By Chris Adams
Is Social Security on the rocks?
Its long-term status is certainly precarious – that’s for certain. By 2034, the Social Security trust funds that cover monthly checks for older Americans and the disabled are projected to be depleted.
But that doesn’t mean it will be broke – just not able to cover all those payments. If the trust funds are exhausted by 2034, Social Security will only be able to pay 79 percent of its scheduled benefits.
That means a person receiving a monthly Social Security check of $1,000 would see that drop to $790.
In a session with National Press Foundation fellows exploring the status of public and private pensions, two top officials from the Social Security Administration detailed the status of the program. Stephen Goss, chief actuary, and Karen Glenn, deputy chief actuary, talked about the long-term projections of the program – and whether politicians can do anything about it.
Or, more importantly, if they will.
As for that 2034 exhaustion date: Goss said Congress has time to do something about it.
“They’ve never failed to act in time on this,” Goss said.
What could Congress do about it? The math on that is simple, although the politics are anything but.
Lower costs – meaning, reduce benefits – by about 25 percent. Options to do that include raising the retirement age, trimming benefits for high earners or slowing the cost-of-living increases each year.
Increase revenue by about 33 percent. “Revenue,” of course, means taxes. That could mean raising the payroll tax rate that is applied to everybody’s paycheck; right now, it’s 12.4 percent (half paid by the employee, half by the employer). Or it could mean raising the cap on wages subject to Social Security taxes (right now, only income up to $128,400 is subject to Social Security taxes).