Last week, the Social Security Trustees published their 269-page annual report on the health of the Social Security Trust Funds, which hold the assets that will help fund future retirement benefits for Social Security recipients. In sum, the future of Social Security is bright, as long as some adjustments are made.
Once again, Social Security is collecting more money than it pays out, resulting in a surplus. Over the course of Social Security’s 82-year history, the Social Security Administration has collected about $19.9 trillion in payroll taxes and other income, and paid out $17.1 trillion in benefits and other costs.
Social Security is also fully funded for the next 17 years with no changes. After that, there Social Security would be able to pay 77 percent of benefits and associated administrative costs.
Critics of Social Security call the far-off uncertainty enough cause to cut benefits and dismantle the safety net. But Social Security will have worked for 99 years by the time drastic measures will need to be taken. This is a program that works. With a few changes, Social Security can remain affordable and vital to ensuring workers can retire without a drastic reduction in their cost of living.
The question of whether to expand or cut Social Security’s modest benefits is a question of values and choice, not affordability. Like with many government programs, the question remains: Do we as a society want to foster systems that support our must vulnerable citizens, such as children, the elderly and the disabled? Expanding – not cutting – Social Security is the best solution to address the system’s challenges and endure its longevity.
Some parts to the solution:
- Increase the minimum wage. While this is a no-brainer in regards to improving job growth and elevating incomes, it also greatly increases the funds that workers contribute to Social Security.
- Pass federal paid family and medical leave. We’ve achieved this in Washington State, and it’s time to go national. Paid leave increases the labor force participation of women, also increasing the funds that go to Social Security.
- Make the rich pay their fair share. The taxes that fund Social Security only apply to the first $127,200 of wage income in 2017. Anything more is untaxed. That means the very wealthy stop paying Social Security taxes after only a few months every year, while everyone else pays continuously. Increasing or removing the cap would bring in billions of dollars in income.
Two-thirds of senior beneficiaries rely on Social Security for a majority of their income. Social Security will certainly remain as important to future retirees, because over half of American households will not be able to maintain their standard of living into old age. As recently as 2013, roughly half of households age 55 or older had zero savings in retirement accounts.
Social Security’s administrative expenses are less than a penny for every dollar collected and spent. Even for the private sector, that’s efficient.
Just this year, President Donald Trump toyed with the idea of eliminating the payroll tax for Social Security, ruining its revenue sources and eventually cutting benefits. Social Security is not a gift; it’s a system that we as American workers have paid for and must continue to protect to get the benefits we deserve.