Social Security is a popular program and most people want to keep it. Many people are also aware that the program’s trust fund will dry up in the coming years, so they want to take steps to get their finances in order to avoid automatic cuts in benefits.
The big question is: what are people willing to do to protect Social Security? Recent research from the Program for Public Consultation at the University of Maryland revealed some important changes that respondents were willing to make.
Image source: Getty Images.
1. Increase Social Security Taxes for the Rich
According to the survey, 79% of Republicans and 88% of Democrats wanted rich people to pay more Social Security taxes to address the funding problems of the pension program.
Currently, Social Security taxes apply to all wages up to a certain amount of income called the wage base limit. By 2022, workers will pay Social Security taxes on up to $147,000 in income, but no more. A total of 81% of Americans from all parties want wages above $400,000 to be subject to Social Security taxes as well.
This would be a big change. Currently, benefits are directly linked to the total taxes you pay. If this shift happened, wealthy Americans would be taxed on income above $400,000, but their benefits would not increase. The extra money they bring in would make up 61% of the program’s deficit.
2. Raising Social Security Taxes for Everyone
Americans aren’t just willing to make the rich pay more in taxes. They are okay with everyone paying more if they need to.
A total of 73% of people, including 70% of Republicans and 78% of Democrats, said they would support an increase in the current Social Security tax from 6.2% of employee wages to 6.5%. This change would also eliminate 16% of the deficit.
3. Raising the retirement age
Overall, 3/4 of Americans would be willing to wait longer to receive their full benefits if necessary. Both 75% of Republicans and 76% of Democrats said the full retirement age (FRA) should gradually move to 68. This is the age at which you can get your standard benefit without it being reduced by early filing penalties.
FRA is currently between 66 and four months and 67 for those born in 1956 or later. If it is changed to 68, the deficit would be reduced by 11%. This would be a de facto benefit discount for everyone as people who claimed early would receive a smaller monthly benefit for life. And those who waited for FRA would miss at least a year of extra benefits if FRA changes.
4. Reduction of retirement benefits for higher earners
Finally, 81% of Americans, including 78% of Republicans and 86% of Democrats, said they would be okay with higher earners receiving fewer benefits. In particular, people are on board with reducing the Social Security checks available to the top 20% of earners. This change would eliminate 11% of the deficit.
This would also be a big change because, as mentioned above, the benefits are currently based directly on how much you earn and pay taxes on.
It’s not clear whether lawmakers will heed the public’s call to make any of these changes. But the research provides encouraging news because it shows that people are willing to do whatever it takes to protect Social Security for future generations, even if it requires sacrifice.