Editorial: Congress must act on Social Security’s solvency

By The Herald Editorial Board

If Congress isn’t sensing a looming problem with a fast-approaching date for the insolvency of the Social Security trust fund — which, according to the program’s trustees just moved up to 2033 — an increasing number of those near retirement are spooked and are deciding to get what they can while they can.

That fear might pressure some constituents to make such a consequential and perhaps financially detrimental decision ought to shame Congress into action.

Between January and May of this year, Social Security retirement claims increased by 18 percent over the same period last year, with some not waiting for their full benefit. For most retirees that might not be the best idea; the longer one waits to collect retirement, the greater the monthly benefit.

While 65 has long been the typical age to begin collecting Social Security, you can claim as early as 62, but at a reduced monthly benefit, up to 30 percent less. For those born after 1960, the full retirement benefit kicks in at 67; and delaying collection each year after further increases the amount until age 70.

Yet, more are heading for an early exit from the working world.

The Social Security Administration, in explaining the increase in claims, saw three key reasons, including a peak in retiring baby boomers; a rule change adopted late last year to increase benefits for some with pensions; and an increase in those who had been collecting spousal benefits filing their own claim.

But a fourth reason, suggested in a now-deleted SSA report from April, showed significant year-over-year increases in claims by 62-year-olds, NPR reported earlier this month.

One early retiree told NPR: “We feel like that may be taken away from us, so we better get it while we can,” pointing to overall economic uncertainly following the reelection of Donald Trump and the potential for Social Security’s possible insolvency.

That potential for the Social Security trust fund to run dry isn’t a new revelation; each year the trustees for Social Security and Medicare issue a report that forecasts the health of separate trust funds for each, while also urging Congress to act to prevent insolvency.

This year’s report concludes that the Old-Age and Survivors Trust Fund will be able to pay 100 percent of scheduled benefits only until 2033, after which all benefits would be cut by 23 percent. Likewise, Medicare will deplete its trust fund by 2033, three years earlier than last year, paying only 89 percent of scheduled benefits.

Adding to concerns is that the report is based on where things were as of December and hadn’t factored in what has happened since, in regard to President Trump’s immigration, tariff and other economic policies.

The Center on Budget and Policy Priorities, a nonpartisan research and policy group, warns that those policies could move up the trust fund’s insolvency date another three years, to 2030. An earlier CBPP analysis found that a typical couple retiring at the time of the trust fund’s insolvency would face a $16,500 annual cut in benefits.

The move to reduce legal immigration and deport undocumented and other immigrants affects Social Security because immigrant workers pay into the trust fund regardless of whether they eventually are eligible to one day receive those benefits.

Tariffs, which impose a tax paid by consumers on imported goods and also can increase the price of domestic goods, will deplete the buying power of retirees’ fixed incomes.

None of this — from tariffs, to immigration to Social Security and Medicare’s solvency — is outside of Congress’ constitutional mandate to address. Its willingness to do so is another matter.

Repairing Social Security demands choices of simple math: putting more into Social Security and Medicare, makings cuts and other adjustments to both programs or choosing some from both approaches.

Among the most direct would be an increase in the payroll tax paid by workers and employers, currently at 6.2 percent (7.65 percent for Social Security and Medicare combined), and/or adjusting or eliminating Social Security’s income cap. Currently, Social Security’s payroll tax is capped at $176,100 in annual income; that amount is adjusted annually to the national wage index. Make more than that and you don’t pay tax on income above that cap. (There’s no income cap on Medicare’s payroll deduction.)

In recent years, specific proposals in Congress would have kept the cap at its current level but resumed the payroll tax for those making more than $400,000; or would have raised the cap to $250,000 and additionally levied a 12.4 percent tax on investment and business income, which could have extended the program’s solvency for the next 70 years. Others have proposed increases to the early retirement age or further pushing up the full retirement age past 67.

Congress eventually will act, but is likely to wait until the insolvency cliff and Congress members’ individual job security appear closer on the horizon. It shouldn’t wait.

“The longer they wait, the fewer policy options will be available, and the harder it will be to avoid abrupt changes to taxes or benefits or to phase in changes that give workers and retirees time to prepare,” reads an analysis of the trustee’s report by the Committee for a Responsible Federal Budget, a nonpartisan organization focused on fiscal policy.

In the meantime, personal circumstances, retirement savings and one’s health will factor into individual’s decisions on when to retire. Fear of potential cuts to Social Security and Medicare benefits shouldn’t be allowed to become part of that math.

That those concerns are weighing on the minds of too many of their constituents should be persuading members of Congress to act.