A whopping 87% of U.S. citizens say Congress should act now to take care of the long-term funding of Social Security, according to an online survey conducted for the National Retirement Security Institute, an organization non-profit and non-partisan.
“Retirement remains a bipartisan issue,” says Tyler Bond, the institute’s research director. “I think it’s an area where all the different political parties can come together and work together to make a difference.”
“Americans from all walks of life love and support Social Security” and are willing to pay more to make it work, said Rebecca Vallas, the executive director of the National Academy of Social Security. “Survey after survey confirms it.” Most surveys also show that people do not want the retirement age to be increased further.
With 2035 Looming, Social Security’s Future Looks Uncertain
Vallas comments that the main causes of the expected shortfalls in the trust funds are the decline in fertility rates, which leads to fewer young working people paying into the system, as well as unforeseen levels of wage inequality.
Because salaries above a certain amount (currently $168,600) are not taxable to Social Security, a large portion of workers’ salaries are outside the income limit, Vallas says. When changes to Social Security began in 1983, Congress anticipated that 90% of income would be subject to taxes, he says. But currently, it is only 82%.
Will Social Security Only Pay 83% of Benefits After 2035?
To reach 90%, the limit would have to be increased to about $280,000, says Jason Fichtner, executive director of the Retirement Income Institute, who notes that even when the trust fund is depleted, the system will be able to continue paying about 80% of benefits. .
While the public may agree that something needs to be done, Fichtner says he’s not sure if Congress will act, especially given the current political environment. But if they don’t, he says, “they’ll actually be supporting an automatic cut in benefits.”
One of the suggestions that has been considered is to increase the age at which workers have the right to receive Social Security benefits. This idea is not typically popular in polls and 47% of respondents in this report oppose it. On the other hand, 52% agree that Social Security should be increased.
Experts Say Social Security Could Survive, But Not Without Sacrifices
In addition to raising the limit on Social Security taxable income, Fichtner says options include slowly increasing taxes on wages and decreasing the Social Security benefits people receive. With higher incomes, due to any tax increase. Under the first scenario, Fichtner says “wage taxes could be raised by 1% for workers and 1% for employers, gradually over 10 years, meaning taxes would increase by 0.1% a year for a decade.”
Fichner comments: “no proposal alone would resolve the entire anticipated shortfall in the Social Security trust fund. Accordingly, he suggests that a “cafeteria menu” of ideas will need to be implemented.”
The Old-Age and Survivors Insurance Trust Fund, which pays Social Security retirement benefits, is expected to run out in 2035, one year longer than anticipated the previous year. At that time, the fund’s continued income is expected to fund only 83% of scheduled benefits.