Social Security won't be able to pay full benefits by 2034. Now there's renewed pressure on Congress to come up with a fix
- Social Security has reliably paid benefit checks on time since the program was created.
- But new projections show it may not be able to pay full benefits come 2034.
- "The problem is enormous," said one former public trustee for Social Security and Medicare.
- Here's where Congress stands with regard to fixing the program, and what voters can do about it.
Social Security's latest report on the status of the trust funds on which it relies to pay benefits has both good and bad news.
The good news is that the funds have not been as hard hit by the Covid-19 as was initially feared, due the economic recovery that has taken place.
The bad news is that the funds' depletion dates have moved up sooner, prompting a chorus of calls for Congress to act swiftly to correct the problem.
"If this report does not trigger a pretty serious and swift discussion on Capitol Hill among lawmakers about what needs to be done to put Social Security back on a financially sustainable track, it's really hard for me to imagine what could," said Charles Blahous, who served as a public trustee for Social Security and Medicare from 2010 to 2015 and is now a senior research strategist at the Mercatus Center at George Mason University.
This year's annual report moved up the projections for when the combined trust funds that pay retirement, survivors and disability benefits will deplete their reserves to 2034, one year earlier than had been projected last year. At that point, 78% of benefits would be payable.
The concept is similar to running out of money in a savings account, said Social Security Administration Chief Actuary Stephen Goss. At that point, the program would only have money to pay benefits based on the payroll taxes coming in at the time.
"The meaning of this is simply to tell Congress that we have shortfalls, that we will deplete our reserves if you don't act, so act," Goss said of the annual trustees report.
Changes to fix the program could include tax increases, benefit cuts or a combination of both.
But so far, Republicans and Democrats have not agreed on a way to approach the issue.
One plan on the Democratic side, called the Social Security 2100 Act, was last introduced in 2019 and had 209 co-sponsors. Notably, all of that support was from Democrats.
Fixes can't come soon enough
Rep. John Larson, D-Conn., who proposed that bill and who serves as chair of the House Ways and Means Subcommittee on Social Security, on Wednesday reiterated his commitment to addressing the program.
"I am working with my colleagues in Congress and President Biden to strengthen Social Security," Larson said. "We simply cannot afford to let politics get in the way of saving this program and securing this trust fund."
Social Security relies on the Old-Age and Survivors Insurance trust fund to pay retirement and survivors benefits. That fund is now expected to be depleted in 2033 — one year earlier — at which point 76% of scheduled benefits will be payable.
The Disability Insurance Trust Fund, which pays disability benefits, will be able to pay full benefits until 2057 — eight years earlier than the last projection — when 91% of benefits will be payable.
Combined, those two funds will be able to pay benefits as scheduled until 2034, at which point just 78% of benefits will be payable.
Experts, including Blahous, said that fixes cannot come soon enough. One key reason for that is that the 2034 depletion date is misleading, he said.
"By the time that trust fund depletion date rolls around, the game is long over," Blahous said. "At that point, the size of the shortfall is so large and so vast, that there really isn't a realistic prospect of closing the shortfall."
If lawmakers were willing to act immediately to fix the system, that would result in a 21% benefit cut for everyone, including current beneficiaries, according to Blahous. If instead that were limited to future claims starting next year, it would instead by a 25% benefit cut.
"The problem is enormous," Blauhous said. "If and when we do make a change to the benefit structure, lawmakers will want to phase it in more gradually."
Reid Ribble, a former Republican congressman for Wisconsin, said there needs to be more pressure on Washington leaders to address the issue.
"We elect members of Congress to solve these problems and if they don't solve them, they ought to be fired and replaced with people that will," Ribble said.
One reason politicians shy away from addressing Social Security is fear of senior citizens, who represent the largest voting bloc in America, Ribble said.
However, that cohort is often willing to accept changes to the program if it means preserving it for the sakes of their children and grandchildren, he said.
Another reason Washington leaders hesitate is because they do not hear from the vast majority of voters who just want Congress to solve the problem.
Members of that quieter group of Americans should not underestimate the power of sending a polite, thoughtful email or letter or making a phone call to both Democratic and Republican leaders saying, "I will be with you if you show the courage to solve this problem," he said.
"They need to get engaged on this issue," Ribble said. "If they did, members of Congress would like a miracle find the courage necessary to solve the problem."