Enacted into law 89 years ago, Social Security, along with Medicare, provides the economic foundation for American retirement.
Social Security has lifted millions of seniors out of poverty and helped millions more pay their bills. It is the most successful social insurance program in U.S. history.
And yet, whenever you talk about retirement, someone inevitably declares, “There won’t be Social Security when I retire.” And you’re far from alone in that opinion.
Earlier this year, Gallup asked non-retired adults, “To what extent do you plan to rely on Social Security when you retire? Will it be your primary source of income, a secondary source of income, or not at all?” Thirteen percent said Social Security will not be a source of income at all, at least an improvement from 22% who said so in 2013.
The reason they’re skeptical is that, according to the 2024 Trustees’ Report, Social Security won’t be able to pay the full amount until 2033. When that deadline comes, Social Security will only be paying 79% of the promised benefits. The deadline for the combined Disability Insurance Fund and the Old-Age and Survivors Insurance Fund is 2035. But as the Center for Retirement Studies at Boston University points out, merging the two systems would require a change in the law. So the deadline that matters for retirees is nine years from now, in 2033.
Social Security will certainly be there when younger generations reach pension age. Surveys consistently show that Social Security enjoys broad bipartisan support among the public, and it is hard to imagine lawmakers trying to justify such large cuts to benefits to their constituents. Cutting benefits by as much as 21% would devastate the finances of current recipients.
The good news is that the underlying economics of strengthening Social Security’s finances are not difficult or particularly challenging: The program’s shortfall amounts to about 1 percent of gross domestic product over the next 75 years. Over the past few years, a number of creative solutions have been developed to restore the program’s financial health and improve benefits.
Politics is the sticking point, but it’s no excuse. Reforms would boost public confidence in the system. The population is aging, and the nine-year deadline is fast approaching. The sooner Washington wakes up, the better.
Chris Farrell is senior economics reporter for “Marketplace” and commentator for Minnesota Public Radio.
