Thirty-five years ago the 1983 Greenspan Commission warned our Washington, DC legislators Social Security funding was in a major state of hurt and full benefits for retirees would have an end date. What have our Congressional delegates done since Social Security reform legislation was signed by President Ronald Reagan in 1983? … little to nothing.
Social Security benefits represent about 33 percent of an elderly’s retirement income — a cornerstone for many senior citizen’s economic security. What’s Social Security’s fate? Sixteen years from now, the year 2034, is when the combined Social Security Old Age and Survivors Insurance and Disability Trust Funds will become insolvent.
What does this mean? If you are 51 or younger, by 2034 the fund will only be able to pay you 79 percent of today’s promised benefits. How’s that for a slap in-the-face upon retiring?
Who has represented Iowa since 1983 and collectively kicked the can down-the-road with relatively no significant reforms? No less than seven Democrats including Sen. Tom Harkin and Representatives Dave Loebsack, Berkley Bedell, Bruce Braley, Leonard Boswell, David Nagle and Neal Smith. The 14 Republicans include Senators Charles Grassley, Joni Ernst, Roger Jepsen and Representatives Rod Blum, Steve King, David Young, T. Cooper Evans, Fred Gandy, Greg Ganske, Tom Latham, Jim Leach, Jim Ross Lightfoot, Jim Nussle and Tom Tauke.
What is the predominant cause of the bleak trust fund future? Back in 1950, there were about 17 workers putting money into the system for every Social Security recipient. Today, there are 2.8 workers for each Social Security recipient and by 2034, there will only be 2.3 workers per beneficiary.
Because our politicians have largely ignored the Social Security trustees’ repeated year-after-year warning, the remedies are becoming fewer and more drastic; reformation of our Social Security system is long overdue.
Four solutions have been offered by multiple experts. First, the Social Security trustees recently told our legislators the payroll tax rate must be increased from the current 12.4 percent to 15.18 percent and if that is not implemented, future benefits must be cut by 17 percent across the board.
Second, to bring the payroll tax up-to-speed, the annual limit on earnings subject to the payroll tax must be increased from the present $118,500 to $240,000.
Third, as per a study by the Social Security Administration, disability program beneficiaries were overpaid by $17 billion over the last 10 years. Hence, the disability system must be reformed by tightening eligibility requirements to reduce fraud.
Finally, the Social Security benefits for the top 20 percent of beneficiaries who created a nice nest egg by their hard work and prudent investments must be adjusted to a reasonable level of aid.
Interestingly, these four solutions have the support from a majority of Democrat, Republican and independent-no party registered voters. Legislators: are you listening? … bipartisan support.
If you are 52 or older, I hope you care enough about your children and grandchildren’s retirement options by demanding our political leaders (remember we collectively voted for them to represent us) implement the above four bipartisan approved solutions.
If you are 51 and younger, don’t assume our legislators will act properly as their past actions are a darn good predictor of future behavior. Demand action or replace them with a responsible legislator who truly cares about your economic security. And, knowing our legislators are not pro-active, it would be very prudent to create a supplemental investment program for the golden years.
Steve Corbin is Professor Emeritus of Marketing, University of Northern Iowa, and a 1966 graduate of Nevada High School.