Given the polarizing nature of Social Security funding debates, Republicans and Democrats in Washington have been unable to make meaningful progress on solutions that would shore up the program. But new research shows that “very large bipartisan majorities” of everyday Americans actually agree on a number of changes that could strengthen it and ensure benefits can be paid in full for years to come.
Without a legislative solution, Social Security trust fund reserves are on track to be depleted just over a decade from now. At that point, only 83% of benefits would be paid to recipients.
Some of the changes with bipartisan support include ideas that are typically thought of as unpopular, like increasing the 6.2% Social Security payroll tax and raising the retirement age, but there’s a key caveat. Unlike traditional surveys that simply poll respondents on their support for policy proposals, this one — from the University of Maryland’s Program for Public Consultation — included an educational component.
Participants were asked to read a briefing with information about Social Security taxes, benefit structure and the funding issue before answering questions.
The results show there’s hope for the country to come together and solve this issue, but it will take a reckoning with the magnitude of the problem at hand, Ron Gebhardtsbauer, emeritus professor of actuarial science at Penn State, said during a panel session Wednesday at the annual meeting of the American Academy of Actuaries.
“They weren’t asked just the question, ‘What do you think about raising the retirement age?’ You know, nobody’s going to like that idea. Or, ‘What do you think about a big tax increase?’ Nobody’s going to like that,” Gebhardtsbauer said. “But what they had to do, it was like a challenge… [that] says here’s the problem, we got to fill this hole. OK, how are we going to do it?”
Here are the four proposals that are broadly supported by Republicans and Democrats in the survey, which oversamples swing states:
- 87% support subjecting wages over $400,000 to the Social Security payroll tax
- 86% support gradually increasing the payroll tax from 6.2% to 6.5% over six years
- 89% support gradually raising the retirement age from 67 to 68 by 2033
- 92% support reducing benefits for the top 20% of earners by income
Put together, these four changes would address 101% of Social Security’s 75-year funding shortfall, which would provide a comfortable buffer from an actuarial perspective, according to the report.
The first of those proposals is in line with the Biden-Harris administration’s policy stance, and the $400,000 figure correlates with its pledge not to raise taxes on anyone below that income threshold.
The idea would be to create a “doughnut hole” for payroll taxes, Aaron Cirksena, founder and CEO of MDRN Capital, recently told Money: “You’re taxed up to $168,600, then there isn’t tax from $168,600 to $400,000, but then from $400,000 and anything above… is getting taxed again.”
The other three proposals — increasing the payroll tax rate, raising the retirement age and reducing benefits — lack support from both candidates in the upcoming presidential election.
Budget proposals from the Republican Study Committee, the large House GOP caucus, call for gradually increasing the retirement to 69. The retirement age determines when people are eligible for full Social Security benefits. You can currently claim benefits as early as 62, but your payouts will be reduced if you claim before 67.
Despite the recent gridlock on Social Security fixes, at the meeting of actuaries, another speaker, Stephen Goss, chief actuary at the Social Security Administration, referred to the financial shortfalls the program is facing in the future as “very remediable.” The survey data above above suggests there may be more room for consensus that previously thought.
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5 Proposals to ‘Fix’ Social Security — and How They Could Affect Your Benefits
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