We Need to Start Thinking Seriously About Social Security

Last Fall I attended a meeting that featured a discussion with our County Executive, the leader of our County’s executive branch. Among the topics he addressed were his long term planning efforts for the County. After he finished I raised my hand and asked whether he was considering the effects the exhaustion of the Social Security Trust Fund may have on our economy and on County programs. He brushed me off. He responded that the so called depletion of the Trust Fund is a political ploy, that it’s not going to happen, and that guaranteeing its continued existence is just a matter of a simple economic fix. This, from the leader of our County. I realized then that it is time we get the word out about what is really going on with Social Security.*

The truth is this: the Social Security Old Age and Survivors Trust Fund is forecasted to be exhausted by 2034. This is real, and it’s a problem we need to address.

What the Trustees Report Shows

First a little background: every year the Board of Trustees of the Federal Old Age and Survivors Insurance and Federal Disability Insurance Trust Funds issues a report that presents the current and projected financial status of the Trust Funds. 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 July 2015. The actuarial opinion is given by Stephen C. Goss, Chief Actuary of the Social Security Administration.

The 2020 Trustees Report indicates that the Old Age and Survivors Insurance Trust Fund, which pays Social Security retirement and survivors benefits, will only be able to pay scheduled benefits on a timely basis until 2034.**

Does that mean that no Social Security Old Age and Survivors benefits will be paid after 2034? No. It means that, when the Fund is depleted, payroll taxes for the program will be sufficient to pay only 76 percent of scheduled benefits.

There is No Easy Solution 

Most of the 130+ proposals to reform Social Security Old Age and Survivors benefits that have been “scored” by the Social Security Administration attempt to eliminate at least a portion of the shortfall in Social Security’s long range actuarial balance. The solutions that have been proposed are grouped into categories with provisions affecting: the annual cost of living adjustment; the level of monthly benefits; the retirement age; family member benefits; payroll taxes; the coverage of employment or earnings, or inclusion of other sources of revenue; and the taxation of benefits.

Most experts agree that, to reform the program, taxes will have to be increased, or Social Security benefits will have to be reduced, or, more probably, some of both.

What Solutions are Likely to be Implemented?

The “fix” for Social Security will depend on who has control of Congress and the White House when the problem is finally dealt with. The answer also obviously depends on whether action is taken prior to the date the Trust Fund is predicted to be exhausted.

What the Depletion of the Trust Fund Means with Regard to Our Economy

Although Social Security Old Age and Survivors benefits represent a large part (sometimes the entire part) of some households’ retirement income, most families will also have retirement funds accumulated during their working years from defined contribution plans (including 401(k) plans), IRAs, defined benefit plans, and/or housing equity. The full impact of the exhaustion of the Social Security Old Age and Survivors Trust Fund, of course, will be much more damaging to retirees of lower income.

We will probably see an increase in the number of “at risk” households; how they will be borne by society remains to be seen. There may be increases in the number of individuals who apply for Federal means tested programs such as SSI. Other individuals may get additional resources from State and local government programs. And yet others may have to rely on support from children and other family members.

When We Should Start Taking Action

Lawmakers have many policy options that would reduce or eliminate the long term financing shortfalls in Social Security and they should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.

Finally, it may be instructive to remember that the Trust Fund experienced a similar situation in 1983 when it was only months away from being exhausted. At that time, the bi-partisan Greenspan Commission developed a set of recommendations that Congress hurriedly enacted. So, it has been shown that it is possible for politicians to work together to arrive at a solution. Advocacy organizations for older adults such as the American Society on Aging should start pushing them harder to address this very serious issue as soon as possible.

*This article only addresses issues with the Old Age and Survivors Insurance Trust Fund and does not discuss the Disability Insurance or Medicare Trust Funds.


**The 2020 Trustees Report notes that the projections and analysis in the Report “do not reflect the potential effects of the COVID-19 pandemic on the Social Security program. Given the uncertainty associated with these impacts, the Trustees believe that it is not possible to adjust their estimates accurately at this time.”

Beverly Rollins spent her career working for the Social Security Administration and later its oversight organization, the Social Security Advisory Board, where she served as Executive Officer for nearly 17 years. In retirement she volunteers with many organizations and currently serves as a member of her local Commission on Aging and is also a member of the ASA Public Policy Committee.