Social Security benefit cuts are once again a hot topic in the political landscape. Many members of Congress are proposing raising the age for receiving full retirement benefits as a way to address the program’s financial challenges. However, experts argue that starting with benefit cuts, especially regressive ones like increasing the retirement age, is not the right approach. Instead, they suggest raising additional revenues from high-income earners as a way to strengthen rather than weaken the Social Security program.
According to the latest report from Social Security trustees, the program is financially stable and can pay all promised benefits without changes until 2033. After 2034, payroll tax income will cover 80% of promised benefits, leading to a potential benefit cut of 20%. To cover the expected long-term shortfall, payroll taxes would need to rise immediately by 3.44 percentage points. While some adjustments will be needed, the costs of the program do not outpace the economy in the future, with Social Security projected to cost 5.99% of GDP in 2100. This indicates that the majority of benefits can be paid without major changes.
With 66 million people receiving Social Security benefits in 2023, including retirement, disability, and survivorship benefits, the program provides basic financial security for millions of Americans. The average monthly benefit of $1,688 plays a crucial role in ensuring financial stability for many individuals. Proposed cuts, like increasing the retirement age, could severely impact the financial security of a large portion of the population, making it a critical issue for policymakers to address carefully.
Raising the retirement age is a commonly proposed benefit cut that could disproportionately impact lower-income earners. While those with a college degree and higher life expectancies may be able to adapt to a higher retirement age, many workers without a college degree or from marginalized communities may struggle with reduced benefits. The one-size-fits-all cut would further deepen income inequality and financial insecurity for those who are most reliant on Social Security for retirement.
The argument for raising the retirement age based on increased life expectancy does not hold up under scrutiny. Some groups are experiencing declining life expectancies, and people’s ability to work longer is not necessarily tied to advancements in medical care for the elderly. Instead of regressive benefit cuts like raising the retirement age, policymakers should consider more progressive approaches, such as raising revenues from higher-income earners by lifting the cap on earnings subject to Social Security taxes or taxing currently excluded income sources.
In conclusion, a careful and thoughtful approach is needed to address Social Security’s long-term financial challenges. Benefit cuts, especially regressive ones like increasing the retirement age, should be a last resort. By focusing on raising revenues from high-income earners and making the system more progressive, policymakers can ensure the long-term sustainability of the Social Security program while protecting the financial security of millions of Americans who rely on it for their retirement.
