When Social Security was launched in 1935, the average life expectancy for men was 59.9 years and 63.9 for women. Full benefits started at 65, so do the math! It sounded almost like a safe, government-guaranteed Ponzi Scheme, minus the scheme part.
But times have changed. The bad news, from an actuarial basis, is that we are living longer. A lot longer. A growing number of people are and will spend more time in retirement, getting Social Security, than they did working and paying into it. Again, do the math!
People who get Social Security — or hope too someday — got some good news recently. Sort of. The good news is that Social Security will not run out of cash reserves until 2034. Some earlier estimates said it would go broke sooner. So where is it going?
Optimists predict Congress will fix it. Maybe make millionaires pay Social Security taxes on all of their income. Maybe raise them for everybody. Others, including many young people, say it’s too late, or soon will be. That there won’t be anything for them 99 years after the program began. For an update on the fate of your Social Security, we invited Tammy Flanagan to be on today’s Your Turn radio show. This is one you can’t afford to miss. Listen live at 10 a.m. EDT on federalnewsnetwork.com or 1500 AM in the Washington area. Or listen to it later by clicking on our home page. But please listen. If you have questions for Tammy shoot them to me before showtime at email@example.com. In the meantime, here’s an overview, including possible changes to save Social Security, she prepared for today’s show:
The reserves of the larger trust fund (OASI), from which retirement benefits are paid, were nearly depleted in 1982. No beneficiary was short changed because the Congress enacted temporary emergency legislation that permitted borrowing from other Federal trust funds and then later enacted legislation to strengthen OASI Trust Fund financing. The borrowed amounts were repaid with interest within 4 years.
As Congress did in 1983, it is apparent that Congress will need to enact changes to Social Security in the near future to avoid the problems that are foreseen in the annual trustees report.
According to the 2022 Social Security Trustees report, lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.
By law, there are six trustees, four of whom serve by virtue of their positions in the federal government: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services and the Commissioner of Social Security. The other two trustees are public representatives appointed by the president, subject to confirmation by the Senate. The two public trustee positions have been vacant since 2015.
Part of the problem is that there are a lot of us who are eligible to receive, are becoming eligible to receive or are already receiving benefits. We’re called the baby-boom generation. There are 71.6 million boomers.
Using their own definition of baby boomers as people born between 1946 and 1964 and U.S. Census data, the Pew Research Center estimated 71.6 million boomers were in the United States as of 2019. According to Census Bureau projections, older adults are projected to outnumber children under age 18 for the first time in U.S. history by 2034. And we’re living longer, despite the many deaths that occurred as a result of the pandemic.
Many policy makers have developed proposals and options to address this long-range solvency problem, and we will talk about them today.