FREE NEWSLETTER
According to the 2025 Trustee Report, the actuarial deficit for the combined Social Security trust funds under the intermediate assumptions is 3.82 percent of taxable payroll for the 75-year period 2025-99.
We could discuss endlessly how and why we got to this point, but I hope we can agree there is no excuse having had thirty plus years to deal with a coming crisis.
I have a suggestion to get on the right track- take a concept from private pensions. Employers must contribute enough to meet future obligations (target normal cost + amortization of underfunding). Plans must aim toward 100% funding over time However, below 80% funded benefit restrictions may apply (e.g., limited lump sums, no benefit improvements).
We need to bite the bullet and tell Americans the truth about Social Security funding and set the tax rate as the actuaries note at 16.22% worker-employer combined. But the real significant changes comes after.
Once we have the needed tax level, we set the rate on automatic by law. That is, each year the rate is adjusted (or not), up or down using actuarial calculations to assure funding remains adequate for the 75-year projection period (essentially a generation.) No law change, no political involvement required. Any legislated benefit changes would immediately be reflected in the tax rate.
Frankly, I view these taxes almost as insurance premiums providing a retirement annuity, disability benefits, survivor benefits and protection for children.
Once and done. Too simple right? The problem is getting Americans to accept the facts instead of the latest meme😢
I disagree with your suggestion to simply increase the current FICA/Medicare deductions to the 16.22% level – which would place 100% of the burden on future workers and their employers.
Simply, that fails to allocate any of the burden to those who have retired – people who failed to contribute enough to ensure the program is sustainable.
Such a decision also locks in Congressional decisions to improve benefits in the past without corresponding increases in taxes – buying votes and sending the bill to generations too young to vote and generations unborn.
What’s to stop Congress from more vote buying if they pay no price for their past deceptions?
It does nothing to return the program to the original intent, to keep full career workers (35 year, 420 qualifying quarter) who retire out of poverty – which would help in our goal to make the program sustainable. .
Long past time to rein in Congress’ vote buying schemes, so we do not end up with additional, idiotic schemes such as the Social Security Fairness Act. I never agreed with GPO and WEP, but, once they were added 43 years ago, once expectations were set, it was stupid to remove them – an action that was an obvious public employee vote buying scheme among many who had already retired.
You seemed obsessed with the idea of vote buying. That doesn’t motivate everything.
Raising the tax rate doesn’t solve everything forever. But i agree the full burden of making SS sustainable beyond 2034 should not fall only on current workers.
what politically feasible ideas are there? I favor suspending the COLA for higher earnings already retired sort of like a reverse IRMAA. But there the problem is there aren’t enough earnings in that category to make a significant difference.
If you avoid being honest with people for 30 years it hard to change direction. Millions of people think Congress stole the trust money for Pete’s sake.
> What’s to stop Congress from more vote buying if they pay no price for their past deceptions?
2028 is the first presidential election where Baby Boomers are no longer the dominant generational bloc in the electorate. They may even fall to third place behind Millennials and Gen X depending on turnout assumptions. The US politics will be interesting to watch as it comes to Social Security and Medicare.
Many in those age groups call SS a scam, see Medicare as socialized medicine. They don’t have a clue and get their info from absurd social media memes. It will indeed be interesting and perhaps disastrous.