V: Social Security

Enact Social Security reforms to ensure long-term solvency and reduce poverty.

Other Information:

Ensure sustainable solvency for the next 75 years while reducing poverty among seniors. Reform Social Security for its own sake, and not for deficit reduction. Social Security -- Social Security is the foundation of economic security for millions of Americans. More than 50 million Americans – living in about one in four households – receive Social Security benefits, with about 70 percent going to retired workers and families, and the rest going to disabled workers and survivors of deceased workers. Social Security is far more than just a retirement program – it is the keystone of the American social safety net, and it must be protected. Three quarters of a century after its creation, we must renew the promise of Social Security for the century ahead. When Franklin Roosevelt signed Social Security into law, average life expectancy was 64 and the earliest retirement age in Social Security was 65. Today, Americans on average live 14 years longer, retire three years earlier, and spend 20 years in retirement. In 1950, there were 16 workers per beneficiary; in 1960, there were 5 workers per beneficiary. Today, the ratio is 3:1 – and by 2025, there will be just 2.3 workers “paying in” per beneficiary. Unless we act, these immense demographic changes will bring the Social Security program to its knees. Without action, the benefits currently pledged under Social Security are a promise we cannot keep. Today, the program is spending more on beneficiaries than it is collecting in revenue. Although the system’s revenues and expenditures are expected to return to balance temporarily in 2012, it will begin running deficits again in 2015 if interest from the trust fund is excluded and in 2025 including interest payments. After that point, the system’s trust fund will be drawn down until it is fully exhausted in 2037. Unfortunately, the default plan in Washington is to do nothing. The do-nothing plan would lead to an immediate 22 percent across-the-board benefit cut for all current and future beneficiaries in 2037. Over the next 75 years, the program faces a shortfall equal to 1.92 percent of taxable payroll. Seventy-five years from now, that gap will increase to 4.12 percent of payroll. The Commission proposes a balanced plan that eliminates the 75-year Social Security shortfall and puts the program on a sustainable path thereafter. To save Social Security for the long haul, all of us must do our part. The most fortunate will have to contribute the most, by taking lower benefits than scheduled and paying more in payroll taxes. Middle-income earners who are able to work will need to do so a little longer. At the same time, Social Security must do more to reduce poverty among the very poor and very old who need help the most.

Objective(s):

5.1: Retirement Benefit Formula

5.2: Poverty Reduction

5.3: Elderly and Disability Benefits

5.4: Retirement Age

5.5: Retiree Flexibility and Hardship Exemption

5.6: Taxable Maximum

5.7: CPI

5.8: State and Local Workers

5.9: Retirement Options

5.10: Retirement Savings

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