Social Security is 80 years old and many Americans are fearful that the old age benefit might die of old age. Surveys show that fewer than half of Americans feel confident that the program will stay equal to or become better than it is today, according to the Employee Benefit Research Institute.
But the institute’s experts assure that SS will be around to remain the retirement mainstay of those now in the work force an their children and grandchildren. If nothing else, the great majority of those now serving in Congress see it as a necessary element of the country’s personal finances, and they’re the ones who control the purse strings. And they are aware of the very strong popular support for the program.
Over the eighty years Social Security has been in effect, it has become very embedded in the retirement plans of millions of Americans. Private sources of retirement income, such as work-related pensions, have been declining in recent years, making it even more important. From the mid-1980s to 2013, the number of pension plans dropped from more than 112,000 to about 23,000.
Retirement-related saving schemes, such as 401(k)s are helpful, but do not sufficiently offset the loss in pensions. Only about half the workforce has access to a 401(k) or other retirement savings plan through their employer. And few workers are able to save sufficient amounts to cushion their retirement years. One recent survey showed that four in 10 older workers had less than $25,000 in retirement savings.
Women have relied more heavily on Social Security. They usually have less income overall than their male counterparts and they live longer. They are more likely to be single and singles often have greater financial needs than do couples. One research effort found that unmarried boomers were five times more likely to be in “poor” categories than those who were married. The numbers of single adults is increasing with each succeeding “generation,” with more Millennials in the unmarried ranks than either the boomers or Gen Xers.
All of these social statistics point to a greater need for Social Security than ever.
Concerns that SS won’t be able to handle the load are based on the assumption that the financial challenges the programs faces, with fewer workers to support larger retirement numbers, can’t be resolved.
The 2014 trustees report showed a $2.8 trillion surplus that could pay projected benefits for another 18 years. Even if Congress did not take steps to shore up the account, the anticipated revenue from payroll taxes would enable the program to pay beneficiaries 77 percent of their promised benefits.
The experts are looking for ways to ensure that the federal program continues to be active well into the future. The remedies may require increased contributions or modified benefits or a combination of these approaches. One suggestion would raise the cap at which workers no longer pay payroll taxes from the current $118,500 to $255,000, which the number crunchers say would solve one-fourth of the problem without serious harm to most workers. Other options would trim benefits for the wealthy or raise the payroll tax by 1 percent per year over several years. Raising the retirement age is another debated option, but the experts advise caution, since the gains in life expectancy have mostly benefited the segment of the population that is educated and more affluent.
The 2016 elections almost certainly will include Social Security as one of the main points of debate, with both parties hoping to prove leadership on the issue. Tough questions and the potential for trade-offs is very predictable, but those who see SS as a mainstay of America’s retirement population, the advice is that the sooner actions are taken, the more moderate the changes are likely to be.