Bud Bickley, 73, is among them. A former heavy equipment mechanic who lives with his wife in Tremont, Pa., Bickley expected to find part-time work when he retired. But that didn’t happen, and now his Social Security payments figure far more prominently in the household finances than he ever imagined. His view: “Cut Social Security? No!”
Ernestine Bosley, who lives in Ravenswood, W.Va., has just marked her 70th birthday. There wasn’t a lot to celebrate. She spends most of her time taking care of her husband, Walter, who has cancer. The Bosleys rely entirely on Social Security benefits—which total less than $2,000 a month for both.
“You try to live on that, honey,” Bosley says. “So when I hear talk about cutting Social Security—it stinks! And if they cut it in the future, for people in their 50s today, why, it’ll be just as bad. They shouldn’t even be talking about Social Security.”
But they are. Critics have been saying for years that we can’t afford to maintain, let alone strengthen, the program because it’s going broke. Polls show that many young people especially believe that “Social Security won’t be there for me.”
So: true or false?
False, says Virginia Reno, vice president for income security policy at the nonpartisan National Academy of Social Insurance. In a worst-case scenario in which Social Security eventually depletes its reserve fund and Congress does nothing to increase the system’s revenue, Social Security would still be collecting enough in payroll taxes to pay 75 percent of promised benefits.
“That’s not my definition of ‘going broke,’ ” Reno says. “It’s my definition of a distant shortfall. ... A gap can be closed—if we have the willpower.”
A new report by the U.S. Senate Special Committee on Aging says much the same thing. It lays out options that could close the projected long-term gap—without cutting benefits. For example:
- Lift the cap. Earnings above a specified level, currently $106,800, aren’t currently taxed to support Social Security. The cap inches up year-to-year based on increases in average wages, but raising it more would have minimal impact on high earners while closing much of the projected gap.
- Raise the payroll tax rate—but very gradually, such as by 1/20th of a percent each year for workers and employers over the course of 20 years.
- Extend Social Security coverage to more workers, including newly hired state and local government employees. This would bring more tax revenue through the door.
- Earmark revenue from the estate tax for Social Security.
- Bolster Social Security’s reserves by diversifying its trust fund beyond government bonds to include higher-yielding commercial investments.
“Contrary to popular belief, the sky is absolutely not falling for Social Security,” says Sen. Herb Kohl, D-Wis., who chairs the Special Committee on Aging. “With modest tweaks, we can ensure solvency and even strengthen benefits for those who count on their monthly check the most.”
Thomas N. Bethell is a Washington writer and policy analyst.