Why Social Security Grumps Are Wrong: Benefits Will Continue

There’s little debate that Social Security will need more financing to bolster its trust fund. That’s been true for years.

But will the trust fund go bust? The doomsayers come out in force on this question, but there are solid reasons why the program will survive and prosper. My prediction is that Social Security will not only survive, it will expand.

According to Mark Miller, who writes the Retirement Revised newsletter, “The causes of the long-range imbalance in Social Security have long been clear: rising benefit outlays expenses as the nation ages, and a dramatic decline in birth rates, which translates into fewer workers paying into the system over time.”

Of course, Congress can act on a fix any time now. There are several proposals on the table.

“If we take action sooner, averting trust-fund exhaustion is the place to start, but Congress also should use targeted benefit expansion as a way to address the rising income inequality, racial and gender gaps that plague retirement security,” Miller notes.

“The aim should be to boost the amount of preretirement income that Social Security replaces, especially for lower- and middle-income households that rely on the program most.”

Where does that leave us? There are lots of ways to attack this problem, adds Miller:

“We can pay for these changes with modest increases in FICA (tax withholding) rates, or through other means. For example, we could permit the trust funds to invest a small portion of their holdings in equities, or impose a tax on financial market transactions.”

“Reforming the program sooner than later would allow for a more thoughtful debate and discussion about possible solutions. And perhaps – just perhaps – action would extinguish the demagoguery that has fueled so much worry among the public about Social Security’s future.”