Social Security: A Solution for the Future
I believe we will find an acceptable path to fully fund Social Security for the Boomers and the generations that follow.
I believe the most acceptable solution is to increase the size of the working population.
I have turned over the rock that is Social Security many times in my hands, thinking of how to change it.
I wrote just last week that I believe Social Security is a just and necessary system for working Americans.
But something still feels not quite right about it.
I believe young Americans contributing to Social Security are contributing to their own retirements, if only in principle. But there’s this twinge that feels like…if I’m contributing to Silent Generation and Baby Boomer retirements now, and Social Security is projected to run out of full funding sometime between 2034 and 2037, what will the program look like when I am 70?
The timeframe of 2034 to 2037 happens to be shortly after all the Boomers reach retirement age. As a result of fewer Americans contributing to Social Security than necessary during this timeframe, the first Americans who could lose part of their Social Security benefit are the Boomers. Social Security benefits wouldn’t have to be eliminated; they could be reduced to distribute the available funds accordingly. The Social Security Administration estimates it would be able to pay about 75% of benefits to retirees in this timeframe.
This is not a problem with an easy solution. The way Social Security is designed, current working Americans pay for the retirement funds of those no longer working. Gen X, Millennials, and Gen Z will be paying for Boomer Social Security, and these younger generations will feel the impact of any changes to the program for years to come.
And this is a problem that’s not going away. Gen X is a smaller generation, then the Millennials take the mantle as the largest generation.
Problem recap: the Boomers are a large generation. There aren’t enough American workers paying into the Social Security fund when they retire. When the Boomers all reach retirement age, the Social Security fund will not be fully funded, unless we change something to fund the program. Future generations, such as the Millennials, will face the same problem.
In concept there are 3 ways to fix Social Security (or some combination of these):
Increase taxes.
Reduce benefits.
Increase the number of workers paying into the system. That means increasing the number of American workers.
Increase taxes.
Increasing individual taxpayer, or corporation/employer contributions, or both, could solidify funding for Social Security.
Increasing wealthy taxpayer contributions could potentially offset some of the deficiency. There are other ideas, such as taxing financial transactions, to potentially increase funding.
Raising taxes on individuals and corporations is always a popular idea (please note the sarcastic tone).
Reduce benefits.
Also straightforward, we could just give retirees 75% of their Social Security income.
Or we could increase the retirement age. This one is particularly painful for working class Americans. Working class Americans are less healthy and live shorter lives than white collar Americans, and arguably need Social Security more. On average, this option would hurt working class Americans more than their white collar counterparts.
I am against taking benefits away from the working class.
Maybe we could have different retirement ages for different occupations.
I’m confident this option would be equally unpopular.
Increase the number of workers paying into the system. This means increasing the number of American workers.
This is an option I don’t hear discussed often in the context of Social Security.
America has a labor shortage. There aren’t enough workers. And our birth rate continues to fall. Not only do we have a labor shortage resulting in many open jobs and Help Wanted signs; we also have a labor shortage resulting in a shortfall in Social Security funding.
We were once a nation of immigrants, and we forgot. We started turning people away. United States Citizenship and Immigration Services even took “a nation of immigrants” out of its mission statement.
I was once the commanding officer of a combat-ready squadron. A full third of my squadron were 1st- or 2nd- generation immigrants. Pew research says currently 14% of the nation are immigrants, so immigrants served at more than double the rate of other Americans, at least in my squadron.
And while they were serving, those young Americans were paying Social Security taxes for older Americans to have Social Security benefits.
If we are against immigration, and we want to fully fund Social Security, we need to raise taxes.
If we are against immigration and against raising taxes, we will have to reduce benefits, starting with the Boomers.
The reality of the situation is we probably need to combine some or all of the above.
I believe we will find an acceptable path to fully fund Social Security for the Boomers and the generations that follow.
I believe the most acceptable solution is to increase the size of the working population.
Thanks for considering my perspective.
May God bless the United States of America.
