“Social Security Solutions” is a series that explores the pros and cons of several current proposals to try and save Social Security. All statistics listed here are from the Heritage Foundation, the National Academy of Social Insurance, and the AARP.
Raise the full retirement age
Currently, the retirement age has been slowly rising from the age of 65. In 1983, Congress put forward a schedule to raise the retirement age to 67, due to the rising age that people are choosing to stop working. There are currently proposals in motion that suggest raising it higher, to either the age of 68 or 70 over time. The argument for this is that people are living longer than they did before, and so it only makes sense to delay the age in which benefits are granted. However, opponents claim that this equates to a cut in benefits, plain and simple. These workers paid into the system for a long time, and they deserve to reap what they sowed. Raising the full retirement age could possibly fill the funding gap by 44%
Begin longevity indexing
Lifespan trends have always been moving up, over the years. This means that social security will inevitably have to pay out more per person, over time. Indexing the longevity of the average lifespan means that monthly benefits will slowly decrease as the average lifespan continues to rise. This could be done in two ways. Either by increasing the retirement age as the lifespan goes up, or paying less out in benefits by changing the formula. Proponents claim that this only makes sense, as lifespans rise. Opponents, however, claim that this is just another cut in benefits, and that lower class individuals have seen much less rises in longevity, meaning that the cuts would unfairly target them. This measure could fill between 20-26% of the funding gap.
Recalculate the COLA
The COLA refers to the cost-of-living-adjustment. It calculates the amount of benefits needed to keep up with inflation. This has already been in place, and has been measured based on the consumer price index since 1975. One proposal to fix Social Security is to change how this is calculated. The new proposed formula would amount to an average of a .3% lower COLA per year. This would reduce benefits by 3% over 10 years, and so on. Opponents, however, argue that the COLA already doesn’t keep up with inflation, because seniors spend more on healthcare, which is highly affected by inflation. This measure could fill 23% of the funding gap.
Increase the payroll tax cap
Payroll taxes for Social Security only apply up to $110,100 of income. This number continues to rise with the average wage. However, there is a proposal to raise the percentage of earnings that are taxed into Social Security. This proposal would raise the cap to $215,000. Proponents argue that this must be done to save the program, but opponents are wary of a tax increase. However, this same tax increase would raise benefits for those that are taxed more, giving them earned benefits. This measure could fill 36% of the funding gap.