Could You Survive A 21% Benefit Cut?
The upcoming election has important implications for the future of your Social Security benefits. While voters have heard a great deal from the candidates for months, specifics of their plans for Social Security have in too many cases been difficult to learn. But doing nothing to strengthen Social Security’s financing, or boosting the adequacy of today’s retirees’ benefits is not an option for the next Congress and President.
Earlier this year the Social Security Trustees estimated that if Congress does nothing to change Social Security’s financing, Social Security’s combined retirement and disability trust funds would become insolvent by 2034. When that occurs, benefits would be automatically cut by 21% as mandated by law.
Although the Trustees estimate that’s about 18 years away, Social Security’s financial pressures are worse than they look. Over the past six years, the program has been paying out more in benefits than it receives in payroll taxes, igniting scathing battles over the debt, as lawmakers wrestle with the repayment of the $2.8 trillion owed to the Social Security Trust Fund.
A year ago, with the November Social Security payments in doubt because the federal budget debt limit had been breached, a number of lawmakers took the nation’s Social Security payments “hostage. ” They demanded entitlement cuts in return for their votes to lift the debt limit. Last fall’s debt deal contained surprise Social Security provisions that restricted the ability of married couples to boost their Social Security income. Some 99% of older Americans that participated in TSCL’s 2016 Senior Survey are dead set against this kind of debt - deal tactic.
According to an analysis for TSCL, a 21% Social Security cut would reduce today’s average monthly $1,300 Social Security benefit by $273. That’s about what you would pay for Medicare Part B, a supplement and a Part D plan — or what many individuals spend on their monthly groceries — or a used car payment.
Lawmakers often insist that benefit cuts are necessary to strengthen Social Security, but those who say this aren’t looking at all the options. Today’s middle - and low-income workers pay Social Security on all of their earnings. Yet the highest paid workers, like CEOs making millions and Members of Congress themselves, only pay Social Security on the first $118,500 in earnings. They pocket the other 6.2% of their salaries as a huge tax break — a tax break that, without changes, benefit cuts may subsidize in the future.
With an equitable tax system that requires all workers to pay Social Security taxes on all of their earnings, Social Security would not only be made solvent for another 50 years, but we could boost benefits by an average $70 per month, and pay a more accurate cost-of-living adjustment (COLA).
Your vote matters more than ever. We encourage you to study the positions of the candidates found in the following articles. Then vote on November 8th!