Social Security Beneficiaries Reach an All-Time High
An oft-cited survey from 1994 found that one out of every three respondents age 18 and 34 said they were more likely to see a UFO than receive a Social Security check. Fast forward 23 years later — last November, the U.S. reached a record number of Social Security beneficiaries at 61,859,250 as reported by Terence Jeffrey, editor-in-chief of cnsnews. Meantime, based on the National UFO Reporting Center (and my math), there were 4,655 UFO sightings in 2017. The 34-year-olds in the survey are still a few years from retirement, but the surprisingly high number of UFO sightings show that little green men may just be light speed away.
The fact is that current Social Security payments are unsustainable. In 2016, blogging on the Social Security Administration website, the then-acting commissioner wrote, “… Social Security is fully funded until 2034, and after that it is about three-quarters financed ….” Longer life expectancies and a smaller working population is partly the reason for the shortfall. The number of Americans 65 and older will increase from about 48 million today to more than 79 million by 2035. As a result, more people will be depleting the Social Security trust fund, while fewer people will be paying into it.
To fill the gap, there are really only three main choices: increase taxes, cut benefits, or fully or partially privatize the system:
- Raising taxes – this is the favored solution among progressives. One way to do this is to eliminate the cap on wages. In 2018, the Social Security Tax is 6.2 percent for wages up to $128,400. Once a worker earns beyond this amount, he or she no longer has to pay Social Security taxes. Progressives want to eliminate the cap altogether.
- Reducing benefits – this approached is favored by conservatives. These are straightforward fixes, but are fraught with political risks.
- Raising the retirement age to 68, 69, or even 70. This would effectively reduce the amount future retirees would receive;
- Switch how payment increases due to inflation are calculated by using the Urban Wage Earners and Clerical Workers Index, or “chained CPI,” which would be a much better indicator of the inflation that consumers face and result in smaller cost of living adjustments.
- Means-testing – this option is one favored by the AARP. It simply means reducing income benefits for higher-income recipients and eliminating them altogether for the Warren Buffets of America.
- Privatize Social Security – this is my favorite option, but it would take a lot of courage on the part of lawmakers. Privatization would allow workers to manage a portion of their Social Security benefits, much like many workers now manage their own 401(k) plans.
Speaker Paul Ryan said that one of his legislative priorities in 2018 is to reform entitlement programs such as Social Security, Medicare, and Medicaid. If reforms actually get passed (and that’s a heavy lift), it would probably be some combination of the above.
“I’ll just work forever…”
The median savings of all working-age families (32 to 61 years old) in the U.S. is just $5,000. It is always astonishing to me that Americans don’t save more, given the widespread knowledge that their Social Security benefits, as meager as they are, are at risk. Any proposed cuts in retirement benefits should be accompanied by incentives to increase savings.
One of the revelations of the Hillary Clinton email leaks was that John Podesta, her campaign adviser, had an obsession with UFOs. If he had only channeled that obsession to solving Social Security as Bill Clinton’s chief of staff, future retirees would be leisurely watching the skies, rather than their dwindling Social Security checks.
Rowena Itchon is senior vice president of the Pacific Research Institute.