Seniors on fixed incomes regularly face money saving challenges. Social Security is a lifeline for most, but those benefits replace just about 40% of pre-retirement income. So a secure retirement must have other sources of income. But the Social Security program itself faces its own challenges, as it is headed for insolvency in less than a decade.
What are the Problems with Social Security?
The challenge can be summarized simply as this: people are living nearly 20 years longer than when Social Security was enacted in 1935, and families are having fewer children. It’s a double whammy. Fewer workers are paying into the system, and people are collecting benefits longer—much longer than ever was expected. Without reform by Congress, in 2033 benefits will be cut across the board by 23% for all receiving them. No vote. It will be automatic. That is because benefits can only be paid commensurate with income coming in and past reserves (surpluses). Reserves are being expended now to keep beneficiaries whole, but they will be depleted in about ten years.
Do We Have Any Solutions?
Saving Social Security has usually come down to three choices, none of which are popular—raise taxes, cut benefits, and/or raise the retirement age. It’s important to note, however, that “doing nothing” is simply not an option. Any politician who says “leave Social Security alone” or “I support no changes to Social Security” is effectively endorsing the 23% cuts for all. Interestingly, that is the current view of both President Biden and former President Trump. They’re falsely holding on to a very outdated narrative that “Social Security is the third rail in politics. Touch it, and you die.”
Facing Down the Challenge
Senator Bill Cassidy (R-LA) and Sen. Angus King (I-ME) are two of just a handful of members of Congress working to find a bipartisan solution. Cassidy says, “Allowing the cuts should be the third rail.” Former vice-president Mike Pence, a likely 2024 presidential candidate, routinely invokes his three granddaughters when talking about the need to make changes to entitlements like Social Security. On the current field of candidates, Pence says, “They’re saying, we’re not even gonna talk about it. But I can’t look those little granddaughters in the eye and do that. I can’t say that this is your problem and not ours. I can’t leave them with those hard choices.”
AMAC Offers a Solution to the Challenge
AMAC first released its Social Security Guarantee in 2013. It was updated in 2023 to reflect the reality of insolvency in a decade. In short, AMAC proposes a blend of ideas to preserve and modernize Social Security without the need for tax increases. First, the plan gradually raises the full retirement age from 67 to 70 while keeping early retirement at 62. Second, it adjusts where income taxes kick in on benefits, something never done when taxes were first implemented in 1983. Third, it eliminates the earnings test for those between 62 and 67, thus allowing people to work and earn as much as they want without benefit reductions. Fourth, a new same dollar amount COLA would be implemented using the average Social Security benefit. Fifth, it slightly modifies the formula for the highest beneficiaries. Sixth, the plan enhances widow’s and widower’s benefits.
A Balanced Approach to the Challenge
AMAC’s plan is a thoughtful, well researched, and balanced approach to a challenge that lawmakers have known about for decades but have failed to address. Time is running out. Learn more about the plan here. You can also listen to a short podcast of the problem and solution made collaboratively between The AMAC Foundation and AMAC Action here.
Jeff Szymanski works in political communications for AMAC Action and previously taught high school economics, history, psychology, and sociology. He writes frequently on the issue of Social Security’s challenges.
