Should be required reading: The article in the Palm Beach Post by the renowned columnist Frank Cerabino on how proposed social security fixes would impoverish over 1 million Floridians (not to mention millions of other Americans). This article should be required not just for retirees but especially for all decision makers.
As Cerabino makes clear, “For more than a million older Floridians, this federal retirement savings program is what’s keeping them from living below the poverty line.” And yet, he points out, “there’s a new push to cut it.” Why? Well because so-called experts and policy makers say that the fund that guarantees the payments will be depleted by 2034 unless something is done. These critics also say that Social Security will be bankrupt because all the retiring baby boomers are now qualified to take their benefit. Couple that with the fewer numbers of workers supporting the fund, and voila, the catastrophe.
But these so-called experts and policy makers are not being totally honest about it. What they aren’t telling you is that 2034 is actually the year when the RESERVE is depleted. Turns out that the Social Security Old-Age and Survivors Insurance Trust Fund has been running a surplus for years. Actually for decades. The scare tactics being used as an excuse to cut Social Security is, in my opinion, hype. As quoted in Cerabino’s article, the Social Security Administration said “After the projected trust fund reserve depletion in 2034, continuing income would be sufficient to pay 78 percent of program cost, declining to 74 percent for 2095.” First, that assumes there isn’t a significant increase in the number of workers who contribute. Second, it’s assuming there are no changes made to eligibility such as raising the age at which retirees become fully eligible or raising the cap on the contribution from taxable wages. That’s my personal bugaboo. This year, only the first $160,200 of earnings is subject to Social Security deductions. Although that’s a hefty increase from last year, my question is, why is there any cap on taxable wages? There’s no cap for Medicare. So why only on Social Security?
The longstanding argument for not having a cap on contributions is that Social Security is not a welfare program designed to provide a safety net but rather, an insurance program in which your contribution is tied to the amount you receive as a benefit. And since there’s a cap on the benefit you can receive, there then must also be a cap to the amount you pay in. So if in 2095 three quarters of the program costs will be covered by the continued income with no other fixes, why are decision makers rushing to cut benefits so drastically? Do they not realize the profound effect it will have?
The data are staggering. What is shocking to me are the numbers. As quoted in Cerabino’s article, The Center on Budget and Policy Priorities stated, “Without Social Security benefits, 37.8 percent of older adults would have incomes below the official poverty line. With Social Security benefits, only 9 percent do.” And according to the SSA, 21% of married couples, 45% of single retirees, and 15% of women rely on Social Security for over 90% of their income. The average amount of Social Security benefits received is just $1,550 per month. So even if you own your home and don’t have a house payment, there’s no way you’re going to be fine with income of only $1,550 per month. That amount is just barely above the poverty line for one person and is below the poverty line for a family of 2 or more.
Ensuring that Social Security is funded for future generations is an important goal that should be discussed and analyzed thoroughly. But drastically cutting the benefits based on misleading data is not the way forward.