The Social Security trustees released their annual report this week on the financial health of this program for the coming 75 years, and things aren’t looking rosy.

As I wrote last year, Social Security is on the brink of a crisis, and America needs an intervention to keep this program available for generations to come. Otherwise, we’re going to see across-the-board benefit cuts or abrupt changes to tax or benefit levels. 

 As the Committee for a Responsible Federal Budget notes, the Social Security Trustees project: 

  • This year, Social Security is approaching insolvency. Under current law, Social Security cannot guarantee full benefits to current retirees. The Trustees project the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033, when today’s 58-year-olds reach the full retirement age and today’s youngest retirees turn 71. Upon insolvency, all beneficiaries will face a 21 percent across-the-board benefit cut. Including the Disability Insurance (SSDI) trust fund, the theoretically combined trust funds will be insolvent by 2035 and beneficiaries would face a 17 percent cut….
  • Social Security will run cash deficits of $3 trillion over the next decade, the equivalent of 2.3 percent of taxable payroll or 0.8 percent of Gross Domestic Product (GDP). 

Shoring up Social Security is vitally important for not only senior citizens but also for their children who take care of their parents and help them plan for retirement. 

Possible reforms to the Social Security program include slowing benefit growth and means testing for higher-income seniors, increasing the retirement age, and modifying the cost of living adjustments (COLA). Currently, seniors across the income scale receive benefits increases tied to average wage growth. Slowing benefit growth for higher-income seniors (say, in the top 10-20 percentile) and adding some income-tied cut-offs and off-ramps would ensure that Social Security is targeted and preserved for the most needy seniors. 

More broadly, near-retiring Americans and those early in their career perhaps should have more options and financial flexibility beyond shelling out mandatory government payments controlled by the government.

President Bush said in his 2004 State of the Union address: “Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people.” 

Former President George W. Bush sought to give Americans greater control of their own hard-earned money. This is worth revisiting as another method to keep Social Security viable for the most needy.