There is little debate that social security needs more funding to strengthen its trust fund. That has been true for years.
But will the trust fund stall? The doomsayers are coming to power on this issue, but there are solid reasons why the program will survive and flourish. My prediction is that Social Security will not only survive, it will expand.
According to Mark Millerwho writes Retirement Revised newsletter, “The reasons for the long-term imbalance in social security have long been clear: Rising benefit spending as the nation ages, and a dramatic drop in birth rates, which results in fewer workers paying into the system over time.”
Of course, Congress can act on a solution at any time now. There are several suggestions on the table.
“If we take action sooner, it is the place to start to avoid exhaustion of trust funds, but Congress should also use targeted expansion of benefits as a way to address the growing income inequality, racial and gender differences plaguing pension security,” Miller notes. .
“The goal should be to increase the amount of early retirement income that social security replaces, especially for lower- and middle-income households that are most dependent on the program.”
Where does that leave us? There are many ways to attack this problem, Miller adds:
“We can pay for these changes with modest increases in FICA (tax withholding) rates or in other ways. For example, we could allow trust funds to invest a small portion of their holdings in stocks or impose a tax on transactions in the financial market.”
“A reform of the program sooner rather than later would allow for a more thoughtful debate and discussion about possible solutions. And perhaps – just maybe – action would extinguish the demagoguery that has fueled so much public concern about the future of social security. “