Lawmakers Urged to Act Soon to Shore Up Social Security

The financial outlook for Social Security remains largely unchanged from last year, with the combined trust funds that pay benefits to retirees and workers with disabilities expected to exhaust reserves in 2033, according to a government report released today.

Social Security cardsAfter that date, money coming into the system would be enough to cover 77 percent of benefit obligations, according to the Social Security trustees report.

At a news conference on Monday afternoon, Treasury Secretary Jack J. Lew said Social Security and Medicare are “fundamentally secure,” though lawmakers must make reforms to bolster the programs.

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“As the largest generation in American history enters retirement, the pressure on our social insurance programs is growing, and we must make manageable changes now so we do not have to make drastic changes later,” he said.

The annual report is a 75-year forecast on the health of the safety net for older Americans. (The outlook for Medicare improved by four years, with its reserves expected to exhaust in 2030.)

Social Security benefits come through two trust funds: one for retirees and their survivors, the other for those with disabilities. The combined reserves are projected to continue growing through 2019; after that the programs’ reserves will be drawn down, as costs will exceed their income.

Taken separately, the fund that pays disability benefits is set to deplete its reserves much more quickly. Unless Congress acts, the Disability Insurance fund will run out of reserves in 2016, at which time it will have enough money coming in through the payroll tax to pay 81 percent of its obligations. There are about 58 million Social Security recipients, including 11 million Americans who receive disability benefits.

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Part of the reason for the pressure on the trusts is demographics, explained Alison Shelton, a senior strategic policy adviser for the AARP Public Policy Institute.

“The population is bigger, but it is also aging,” she said.

More Americans are falling into the age group of 50 to 61, which are disability-prone years, Shelton said. And as more women have entered the labor force, more of them have become eligible for disability benefits.

This isn’t the first time the disability fund has approached such a deadline. The trustees’ 1994 report, for example, projected that the disability fund would deplete its reserves the next year. Back then, Congress reinforced the fund by shifting a slightly larger portion of payroll taxes to it. Currently, the payroll tax totals 12.4 percent of workers’ pay, with employers and employees each contributing half. Most of that money, or 10.6 percentage points, goes toward retirement and survivor benefits. The rest, 1.8 percentage points, supports disability benefits. 

AARP and others support a similar reallocation again.

Nancy LeaMond, AARP executive vice president, said in a statement that the new report “confirms that if the combined resources of the Social Security trust funds are rebalanced, no beneficiary needs to face an imminent reduction in their earned benefits.”

LeaMond said though Social Security remains strong, “modest changes” will be needed to ensure its future for generations to come. She also advocated for a national debate on the growing retirement insecurity in the country and the role of Social Security benefits.

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“Americans of all ages deserve an honest, open, national discussion about the value of Social Security and its importance to millions of retired workers, spouses, children, veterans and persons with disabilities,” LeaMond said. “We strongly urge Congress to hold a separate debate on the solvency and adequacy of Social Security, as it is a separate, self-financed program that people pay into throughout their lives and count on for each generation of our families.”

Photo: Zimmytws/iStock

 

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7 comments
wklnd309
wklnd309 5pts

Congress is not concerned because it does not affect their retirements.  I totally agree with george016 that congress needs to STOP using SS as a slush fund and pay back what they have borrowed.

george016
george016 5pts

I have ask AARP and my representatives about a article in the March 6, 2014 Cape Coral, FL. - CAPE LIFE NORTH.

The article said in 1983 President R. Reagan and the Republican Party increased the payroll tax deduction for SS to 6.25 persent. This created a surpluses resulting from the 1983 payroll tax hike. Politicians from both political parties began using it like a giant slush fund. They replaced the money with pink treasury notes at the present time our government owes SS nearly $3 trillion. It appears as though the SS program could remain solvent if Congress (1) quit spending the surplus funds for things other than SS benefits. (2) replace the $3 Trillion they have already used from the fund and (3) raise the retirement age for SS recipients. All it requires is a little intelligence and a little resole.

In Aug. 14 1935 President F. D. Roosevelt signed into law the SS Act that was conidered a solution to the difficulty of extreme poverty among the senior citizens.

The last part of the ariticle said; We certainly have a impending disaster facing us and not one member of Congress, other than the tea party and Libertarians, appear to be concerned.

As I said I ask my representative about this, have not recived any answer. AARP Office of Policy Integration sent me a post card that they appreciate my feedback.

Lets get Congress and President to start working on this.

roadgoliath
roadgoliath 5pts

Unfortunately, the Communist Socialist Right Wing Rich don't believe in the government having any assets.... just listen to their US government hating, neo-Nazi fascist rhetoric ! They do believe in receiving $Trillions in big government welfare every year in the form of: NO-BID contracts; subsidies for rich & corporate landbarons;

bailouts for rich corporate criminal economy destroying embezzler/bribers; & handouts for corporate criminals who temporarily move a few jobs around from state to state until it's time to go home to their real love COMMUNIST CHINA !!!   The traitor terrorist right wing will never fund social security because their welfare for the rich debt & deficit will never end !!!

2Papa
2Papa 5pts

I hope they act promptly as I live check to check.

IMCONCERNED
IMCONCERNED 5pts

To get the President to start working, he would have to stop fundraising....that's not going to happen.

To get the House to start is 50/50, if it  goes to the Senate the chance that Harry Reid reads it is ZERO.

Ok2bclever
Ok2bclever 5pts

@george016 Libertarians would destroy Social Security and Medicare if it was within their power. Tea party members are more split, but hardly a solid force that defends Social Security and Medicare. Disaster is Republican Party language. Failing to do anything would still result in everyone getting 77% of their Social Security. Frankly, a sure thing of 77% is a better promise than the stock market has given to most Middle Class investors over the years, especially in the more recent years. More importantly, it would not be hard to "fix" the shortage to keep SS 100% solvent. Simply requiring all US Citizens to pay SS tax on their earnings each year rather than the artificial cap placed on the system now to benefit the rich would resolve the issue. Beyond the fact that the rich can certainly afford the relative piddling tax increase this would be to their continued record increasing profits it is only fair. Every dime I earn I pay tax on. All should too. There shouldn't be an artificial cap that if you are rich enough you can stop paying into SS!