By Mary Johnson, editor
As the debate over Social Security and Medicare deficits starts to simmer, those of us of a certain age are hearing that “Boomers have it made!” Some say that Social Security is going bankrupt, and Boomers get more generous benefits than today’s younger workers will ever get.
But Baby Boomers don’t “have it made.” Social Security insolvency is looming, which means every one of every age needs to get involved if we want to keep the system strong for all.
The fact is no retiree today “has it made.” Proposed cuts would affect all retirees as well as younger workers. The last of the Boomers were just starting their careers in 1983, the last time Social Security underwent a major package of reforms. Since 1983 Boomers:
- paid higher Social Security and Medicare payroll taxes, which affected ALL generations of workers after 1983,
- saw benefit cuts as the eligibility age for full unreduced benefits increased from age 65 to age 67, and
- pay taxes on their Social Security benefits based on outdated income thresholds established in 1983 legislation.
We aren’t the only ones who inherited a less generous system. Our parents, the generation that fought in WWII, saw significant benefit cuts of up to 20 – 25% when they retired in the 1980s due to earlier legislative changes that changed the Social Security benefit formula. Those changes were abrupt and went into effect only a few short years before that generation began to retire.
Congress made changes to Social Security in the past and will make changes again in the future. And, once again, some lawmakers in Congress are claiming that our cost-of-living adjustments (COLA) are overly generous and thus “overpay” Social Security recipients. They say that COLAs should be reduced or even eliminated because the Social Security Trust Fund is going insolvent.
Elected lawmakers who say this are in for a rude awakening. Less than 1% of TSCL’s Senior Survey participants say they felt overpaid by the 8.7% COLA in 2023. In fact, more than half, 52%, said their household costs rose more than 8.7% in 2022. In case we need to remind our elected lawmakers in the House, older Americans tend to vote in greater numbers than younger working-age adults.
The Social Security COLA is intended to protect the buying power of our benefits. Using a conceptual cost-of-living measure that grows more slowly than actual price indexes is not protecting our benefits from actual price hikes. It’s a budget gimmick that would cost average retirees thousands in Social Security income over the course of a typical retirement.
The highest-earning workers stop paying Social Security taxes once they have earned more than $168,600. Those who can afford it the most stop paying Social Security taxes at a point in the first months of the year. If the highest-earning workers paid Social Security taxes on all their earnings like average workers, that would fix up to two-thirds of the Social Security funding shortfall for 75 years.
It's time to tell our Members of Congress to do what is fair and pass legislation that would include fixes to Social Security that most of the public can support — starting by lifting the taxable maximum.
Does your COLA overpay you? Tell us! Please take TSCL’s 2024 Senior Survey.