Social Security: A Surmountable Challenge

You’ve heard of artificial deadlines? Hmmm…retirement at 65 (or whenever) comes to mind. Well, how about an artificial milestone created for sensational headlines, contrived to bring attention to a non-existent crisis? Case in point: this week, retired school teacher, Kathleen Casey-Kirschling, became the first boomer to apply for Social Security benefits. It was a field day for the school of chicken little reporting as phrases like looming bankruptcy, financial implosion, fiscal meltdown, Boomsday is Nigh (SF Chronicle), and even the suggestion that Ms. Kirschling was Public Enemy No. 1, made their way into print and broadcast. The Times (London) weighed in with its own: From boom to bust: the silver generation that could leave Uncle Sam broke. Social Security Commissioner Michael Astrue, who orchestrated the media event, set the tone with his term for the ‘crisis’: America’s Silver Tsunami.

Kudos to the Kansas City Star for its focus on the fix, of which there are quite a few, not to mention that we have 34 years (that’s four 8-year presidential terms) to implement them. Everyone is in agreement that we have a problem, although it pales in comparison to Medicare funding and rising health care costs. The version we prefer comes from the Social Security Board of Trustees Report itself: “The financial difficulties facing Social Security and Medicare pose enormous, but not insurmountable, challenges.”

Fixes that have both supporters and detractors include:

  • Raising the cap for FICA, now set at $97,500.
  • Raising taxes from the current 7.5% (both FiCA and Medicare)
  • Increasing the age of eligibility for full benefits (it is already at 67 for some)
  • Encouraging savings (now that’s a novel one!)
  • and so on…

Oddly enough, the possibility that the majority of boomers will remain in the workforce, as they have been declaring in surveys over the last several years, doesn’t enter into the crisis equation. If they do — and we think health insurance concerns will contribute to the decision to keep working — the projection of a smaller worker to retiree ratio, from 3 to 1 currently to 2 to 1 (less income, more pay outs), is just plain wrong. As of now, if you are 65 or older, you can be collecting Social Security benefits and earning an income (on which you pay FICA taxes, of course). It seems to us that we need to factor in productivity gains and the impact of immigration on the workforce. If there is anything to fear, it is that the high cost of medical care will gut Medicare. But Social Security is, in our opinion, a surmountable challenge. What’s needed is imagination and political will on the part of the elected and the electorate…now rather than later.

“An optimist sees an opportunity in every calamity; a pessimist sees a calamity in every opportunity.” — Winston Churchill

More reading:

Social Security needs fixing — and fast. Kansas City Star
Social Security: Scare tactics or true crisis? Lita Epstein, author, Complete Idiot’s Guide to Social Security
Generation Ageless J. Walter Smith
Is Social Security in Trouble? Depends on Whom You Ask Knowledge@Wharton
Center on Budget and Policy Priorities