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AS A RETIREE FOR WHOM Social Security payments are my financial foundation, it’s worrying to hear about a potential cut in benefits 11 years from now—because I’ve seen this movie before.
If Congress does nothing, benefits would drop 23% in 2034. It’s an unfathomable situation, but one that most pundits believe is unlikely. Let’s hope. Thankfully, I feel secure that my state pension—one third of my monthly income—will stay solvent.
More than 40 years ago, Congress and President Reagan made significant changes to Social Security’s rules, including one that would have hurt my family if it had happened just a few years earlier. As a fulltime college student in the 1970s, I received a monthly payment from Social Security because my father was disabled by a stroke when I was 12 years old.
Since 1981, payments to children of retired, disabled or deceased parents typically cease at age 18 or upon high school graduation. The policy changed because many elected leaders believed needs-based financial aid programs, such as Pell grants, would fill the void for lower-income families. At the time, student enrollment and eligibility could not be readily verified, as it can today, thanks to the electronic filing of the FAFSA, the Free Application for Federal Student Aid form. In 1978, the Social Security Administration estimated that as much as $150 million a year was being overpaid because students were no longer going to college fulltime.
Although the benefits weren’t needs-tested, it was reasonable to assume that a college student whose parent was disabled, retired or dead didn’t have significant family income. Average 1972 benefits were $1,017 for students from the lowest income families (under $2,500 a year) and $1,344 for students from the highest income group (over $20,000), according to a 1977 study by the Congressional Budget Office.
I can’t recall precisely how much I received each month, but I think it was about $100. It certainly helped. I attended a state university that had much higher in-state tuition than most others. I was fortunate that my grandfather paid my tuition for all four years, but the Social Security payments helped considerably, especially with room and board. I also worked part-time and summers.
Could I have gone to Penn State or any other college without the help of Social Security? Yes, but it wouldn’t have been as easy, and I doubt I’d have been eligible for Pell grants or other assistance because my mother was still working.
Because of the help I received, I’ve always been happy to pay my share of Social Security during my 40-plus years of work. But today, my benefits are more than a helping hand. They’re my bedrock. I hope Congress finds a way to shore up the program without making cuts.
Dwight Eisenhower said: “Should any political party attempt to abolish social security , , , you would not hear of that party again in our political history. There is a tiny splinter group of course that believes you can do these things. Among them are a few Texas oil millionaires and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”
I’m afraid the “splinter group” Eisenhower refers to has grown into a movement during the past decade. True, Social Security can be sustained long-term with a few simple fixes, Everyone knows that. But our political leaders lack the courage to make those fixes. More alarming, some politicians now–and they are a growing number–would be perfectly willing to see the end of Social Security, which they see as a “socialist” program of the nanny state. Few of them will openly advocate to end Social Security. Their long-term plan, I believe, is simply to do nothing and watch the program slowly fade away. And, pardon my cynicism, I don’t thing voters will rush in to save the program. Many of them will not notice what’s happened till it’s too late..
Wise individuals most are indeed.
We all know moneys fungible in .gov.
However as Jeffs -24 in red illustrates, few appreciate truths our children or next generations will face.
Journalism has its agendas, polices & guidelines. Like everything.
Some contributors recognition of truths and insights wish to discuss avoid and they’re uncomfortable with.
As we know history repeats itself.
Few recognize the broad implication denying that SS resembles a Ponzi scheme. Socialism indeed has consequences, unfortunate ones.
As other contributors have alluded, someone or something will save the day.
All of todays youths will face obstacles to overcome.
As have every generation.
Many will sweat and bleed along the way.
The Mariana ridge, a deepest point on this planet with life of one sort or another, is less explored till recently than space, scientifically speaking. Could be new I.T. means.
sorry for editing late, my error, again. 🙁
Best2All.
I was in the same position, receiving a small SS benefit as a young adult. It stopped in 81, just as I started college. Thankfully, back then a semester a community college was just $500, later university was $1000/semester. So I ended up working my way through school with no debt. I have some sympathy for students today, minimum wage has not inflated relative to tuition, so it would be quite difficult to work ones way thru college today, even going the community college/state school track that I took. Albeit there are certainly many students that take more loans than they need or choose an expensive college, all for low pay employment upon graduation. Heck I had to use a job catalog to see projected wages, now a days, one click away.
I suspect that SS is safe for near term retirees, but will likley be reduced for future retirees. Seniors vote…
Both my children had tuition paid through either an academic scholarship (wealthy endowment in private university) or by a state lottery funded program for bright students. But housing and other expenses add up, so they have debt. And yet both are doing well so college can still be worth it for some.
I think Social Security benefits could be cut without people even knowing about it. That is what happened during the Obama administration. The change about file and suspend when filing for Social Security benefits was stuck into the Bipartisan Budget Act of 2015 and passed, I think, in December. Nothing from AARP to let us know about it. There was no push back from seniors or advocacy groups. I don’t think any of our representatives lost office due to supporting it. I don’t think anyone even knew about it. When you file now, you are deemed to be applying for any benefits you are eligible for.
Here is how easy it could be to make SS solvent for at least 75 years.
Increase Payroll Tax by 1.5%
Tax All Wages Above $400,000 (with added benefits)
Cover Newly-Hired State & Local Workers
Apply the Payroll Tax to “Cafeteria Plans”
Income-based Medicare deductions are not capped, so why should Social Security not be treated the same way? Seems that alone would solve the insolvency fears – if Congress would keep hands off of the funds! Or maybe that’s the thinking behind Open Borders – eventually possibly more net contributors to the benefits funds since most migrants are very young?
Congress hasn’t done anything with funds to affect solvency. In fact, undocumented immigrants are helping to the trust contributing billions of dollars in taxes each year and not collecting benefits.
Congress loves a good “crisis”, especially one that it has manufactured for itself. Take today’s debt ceiling “crisis”–there will be plenty of posturing and name-calling, and nothing will get done until the brink has been reached. Then, Congress will ride to the rescue by “fixing” the problem –er, “crisis”–that it created for itself. And then patting itself on the back for doing such a good job in dealing with the “crisis”. Lather, rinse, repeat.
There’s no way that Congress will take a pass on the coming Social Security “crisis”, by offering a common-sense solution well ahead of time. What we can expect, if history is any guide, is Congress waiting until the system is teetering on the brink of “insolvency”–whatever that means–and then “riding to the rescue” with an 11th- hour “fix” to ensure that no benefits are actually cut immediately. It’s a story line that played out in 1983-1984, and I expect no different this time around. And I expect nothing of any significance being done in the mean time, as is our usual way of dealing with things.
I feel pretty confident that 10 or 11 years from now my SS won’t be cut for reasons that others have given here – those representatives and senators want to be reelected. But I have serious concerns for how the system will treat my 30-something sons and step-daughters. I can imagine a day when legislation is written that “winds-down” SS and Medicare. Everyone seems to be thinking in terms of the next decade and not looking to the horizon for a longer-term solution.
Actually, my view that social necessity will cause just the opposite – greater benefits for both.
Ron, I know that with all the noise around this issue, it’s easy to get stressed. But I urge you… don’t.
Our elected officials may not always be paragons of intelligence, but very few are stupid enough to kamikaze their careers by triggering an uprising of 80 million angry seniors, plus their families, plus anybody within 20 years of retirement, by failing to support Social Security.
We seniors have plenty of things to worry about. This ain’t one of them.
We were in Madrid a couple of weeks ago, and while on a tour, saw a very lively protest going on. Our guide explained that benefits to retirees had been cut by 20%, and that was what the protest was about. Yeah—they didn’t like it (didn’t need to know much Spanish to get that), and they won’t here, either.
Someone sung, “Don’t worry. Be Happy”. Great lyric but for us near-retiree, knowing that I would get only 75-77% of the SS benefits in 10 years is a warning keep me up some nights.
Good perspective.
But no denying the fact that SS is a ponzi scheme and is insolvent. Socialism has consequences, and politicians are responsible for that.
I agree, Peter J. Another article/comment in today’s email from HD mentions a Socratic Dialectic where different opinions are sought in a debate to verify or dispute a common belief. So the number of down votes you received should have been explained by the downvoters with valid points rather than comments than it “works” so it must be okay.
Doing simple data analysis, a SS contributor can create a spreadsheet of taxes paid into SS over the years, and allow for each year’s SS tax to compound annually until the year the benefactor starts to withdraw. Use a reasonably low 3% for the compound rate. The accumulated value of the taxes at Full Retirement Age can then be annuitized to determine what your self managed benefit would have been.
I would have preferred to manage my own SS money over the years, but Uncle Sam did not allow that self directed option.
That’s ridiculous. How long has the longest running Ponzi scheme lasted? Madoff’s is probably the longest. Since it’s beginning, SS has paid virtually everything it has promised. Fixing SS is an actuarial problem that can be fixed in 5 minutes if politicians had the political will. Now Medicare is a fundamentally different story.
https://www.ncpssm.org/documents/social-security-policy-papers/social-security-is-not-a-ponzi-scheme/
Pure nonsense. It’s worked for 90 years and will continue to do so regardless of what you call it. Demographics change, costs change, life expectancy changes and we simply need to adjust as we go along. WHAT IS YOUR BETTER non-socialism idea for all Americans?
NOBODY, NOBODY‼️ Is going to cut your or my benefits by intention or default.
However, it has been clear for decades that changes are needed and the Trustees have been urging that action be taken to make the program solvent and sustainable. Congress has ignored the warnings for decades.
Benefits in the future must be adjusted and or taxes – on everyone, including employers – be raised. The shame is this can be accomplished with relatively modest, mostly painless changes, over time.
Congressmen/women, during election campaign, have promised us many things, including revamping the SS program and its future. Once elected, they become different persons and whatever they promise during the campaign, is deprioritized and/or disappeared. Two/Six years later, the process is repeated. Congress has played this “kick-the-can” for too long.
And yet, we re-elected them year after year. 🥵
Yup. It’s always ” someone else’s ” congressperson that’s the problem. Certainly not in my case. I constantly rail against my congressman. Unfortunately the chance of him being voted out of office are slim and none. I used to listen to a radio talk show host who constantly preached D.R.I.P….Don’t Return Incumbent Politicians. True now more than ever.