Concern about Social Security is as perennial as it is rife. A panel of experts in a recent seminar offered some suggestions for addressing the challenges facing the system.
Panelists in the recent National Institute on Retirement Security (NIRS) webinar “Social Security: What’s Next and New Research” included Tyler Bond, NIRS Research Director; Joel Eskowitz, AARP Public Policy Institute Director; and Joan Entmacher National Academy of Social Insurance Senior Fellow.
Setting the Table
Bond discussed the report the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds in its annual report to Congress recently issued. He told attendees the program has enough in reserve to fully fund benefits through 2034. If no changes are made, Bond warned, after that tax revenue will only cover 80% of the benefits they are supposed to.
Tyler added that long-term forecasts regarding Social Security’s funding and prospects “have remained relatively static,” despite the impact of the pandemic and economic instability.
Eskowitz observed that as the members of the Baby Boom generation worked, money was coming in to the Social Security Trust Fund; however, as they retire the reserves as becoming depleted. Still, he said, worker contributions are still enough to cover nearly 80% of outlays. The biggest problem, said Eskowitz, is the number of employees vs. the number of retirees, plus the effect of lower fertility rates.
Tyler noted that proposals have been submitted on Capitol Hill to address the challenges that the Social Security system faces. He also noted that there are other tools intended to make sure that Social Security benefits are adequate.
Tyler cited the Special Minimum Benefit, which was established in 1972 to provide a benefit “floor” for lifetime low-income earners. It is indexed to prices, rather than wages, he said; consequently, the value of the benefit has eroded.
Participation in the Special Minimum Benefit program has declined as well, said Tyler. He noted that there are proposals to reform that program, such as setting the minimum benefit at 125% of the federal poverty level. “This would ensure that no one claiming Social Security would be retiring into poverty,” he remarked.
Entmacher focused on caregivers. She argued that caregiving work “is valuable, but often unpaid” and that they “often sacrifice earnings, reducing their Social Security benefits.” She added the changes in family structures exacerbate that reduction, since fewer caregivers qualify for Social Security spousal benefits.
Crediting caregiving work, Entmacher continued, “can improve retirement security and reduce gender and racial inequality.” She suggested that ways to do that include: (1) count some caregiving years toward the minimum benefit; (2) drop some low-earning caregiving years from the average for the regular benefit formula; and (3) impute earnings for some caregiving years in the regular benefit formula.