Ways to Fix Social Security

Posted by: Sophie H. | Jan 17,2008

I’d like to add to Gene’s post today about how Boomers are panicking in regards to Social Security and apply for benefits early because they fear benefits will dry up.  However, is there any truth to the idea that Social Security could totally fold in the coming years.  In other words, is it just paranoia about the fall of Social Security, rather than rational planning?  

Here are the facts.  In 2017 Social Security is projected to start paying out more than it takes in through payroll taxes.  If you’re 65 today, that means that you’ll be only 74 when Social Security starts hitting a deficit, so I can certainly understand the concern that you want to get Social Security payments as soon as possible.  Except for one thing: if you’ve already been receiving Social Security, you won’t be the victim of cuts in the payments you’re already getting.  

I can hear a contrary argument as I type.  What if Social Security needs to be reformed to such an extent that the reforms hit everybody?  What if there’s a major military engagement that further taxes the infrastructure?  I can understand those concerns, as there’s no guarantee that the world is going to be exactly the same place ten years from now.  What is going to happen is that taxes are going to have to be raised to make up the difference – that’s just the simple truth. This could have an affect on many retiree’s retirement funds, as more money will be going to taxes, rather than savings, even if this means that the Social Security system will be tenable for longer.

So there’s no real way to qualm your fears about what’s going to happen with the Social Security system because basically no one knows.  This is made especially more complicated because we don’t know yet who is going to be President next year.  Republicans and Democrats have very different ways of tackling the problem.  All said, I think there’s reason to worry, but not to panic.  The entire Social Security program is not going to fall apart completely, but restructuring is an inevitability because it cannot sustain itself as is.  

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