What’s Retirees’ Biggest Concern About the Future of Social Security?
A $300 Benefit Cut
By Rick Delaney, Chairman of the Board
There’s a discussion about Social Security that we haven’t yet heard much about from the candidates yet. What’s their plan to address Social Security’s financing issues? The answer is critical because, according to the independent Congressional Research Service (CRS) which advises Congress, massive cuts are looming for Social Security unless Congress makes changes, and fairly soon. The CRS estimates that those cuts would cost the average retiree a stunning $300 per month ($3,600 a year) in Social Security benefits if Congress fails to make changes to the program in time.
The Social Security Trustees estimate that the Trust Fund will become depleted just 15 years from now in 2035. According to the CRS, if the Social Security Trust Fund runs out, the law effectively prohibits full Social Security benefits from being paid on time.” If that were to occur, benefits would be reduced about 20% in the first year to match the amount of payroll taxes coming in. That would be the equivalent of a $300 per month benefit cut for someone with an average benefit of $1,500.
I don’t need to tell you cuts that deep simply could not be absorbed by the average retiree. According to TSCL’s Senior Survey, forty-five percent of you said that that your net monthly Social Security benefit grew by less than $10 in 2019, despite receiving the highest cost-of-living adjustment (COLA) in years. The lack of growth in net Social Security benefits will affect considerably more people in 2020 because retirees received a much lower COLA this year, and Medicare Part B premiums grew more quickly than in 2019.
To bring Social Security into balance without cutting benefits, Congress would need to increase payroll taxes by about 3.2%, or lift the amount of wages subject to taxation from $137,700 and apply the Social Security payroll tax to a greater portion of earnings. TSCL is working to build support for passage of legislation that would provide this revenue boost.
TSCL is going door to door meeting with Members of Congress asking their support for H.R. 860 and S. 269, Social Security “boost” legislation that would provide solvency through increasing revenues, while modestly boosting benefits and providing a more generous annual COLA
Fifty percent of participants in TSCL’s recent Social Security survey say their biggest concern is that benefits will be cut. Thirty-four percent worry that benefits will continue growing more slowly than their expenses. With the average retiree benefit at just $1,500 and healthcare costs taking more than one quarter of their checks— retirees simply could not survive long with a $300-a-month benefit cut. But one thing is certain, taking no action at all and letting Social Security funds run out would be the equivalent cutting benefits by 20%.
With so much at stake this election year, we encourage all of you to learn what your candidate’s plan is for Social Security. No plan at all is the same as a benefit cut!