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May 13, 2019

Personal Finance I Perspective I Perspective | In search of a simple fix for Social Security

By Michelle Singletary Michelle Singletary Personal finance columnist.

Should Congress increase the full retirement age to 70?

There’s no question that if things stay as they are, the two programs that make up Social Security will have enough money coming in by 2035 to pay only 80 percent of benefits.
Can you imagine the financial chaos if beneficiaries saw a 20 percent reduction in benefits? Things could get ugly.
The total annual cost of the Old-Age and Survivors Insurance Trust Fund (OASI), which pays retirement and survivor benefits, and the Disability Insurance Trust Fund is projected to exceed total annual income in 2020, for the first time since 1982, according to a report released recently by trustees of the Social Security and Medicare trust funds.
The Disability Insurance Trust Fund is projected to have enough money coming in to cover 91 percent of scheduled benefits when its reserves are depleted in 2052.
The situation is grimmer for OASI. Without reform, the safety net for retirees will have enough continuing tax income to meet only 77 percent of scheduled payment.
A number of changes have been discussed to solve Social Security’s problem, including increasing the age at which the full retirement benefit can be collected.
The full benefit age is 66 years and 2 months for those born in 1955. It will rise gradually to 67 for those born in 1960 or later.
But could the full retirement age rise to 70 to help a broken system?
A change in 1956 allowed women to collect benefits as early as age 62. In 1961, amendments made men eligible also at age 62. But if you collect early, you get a reduced benefit. If you start your retirement benefits at 62, your monthly check is reduced by about 30 percent.
One favorite fix proposed for the Social Security shortfall is raising the income threshold on which the tax applies. For 2019, that is $132,900. So earnings above that amount are not subject to the Social Security tax, which is 6.2 percent for employees. Employers kick in a matching 6.2 percent.
Whatever legislation Congress passes to solve the problem — and a solution has to be found — there will be people who won’t be happy. Here’s what some readers feel about the need to strengthen Social Security and how they would address the problem.
Jim Shaffer of Charlotte wrote: “When I started my career in 1976 after graduation from college, the dire warnings about social security running out of money were everywhere. As a result, I planned throughout my career assuming Social Security was a myth, and I’d get nothing from it. I placated myself with the idea that my taxes were going to my mother, though she died before collecting much. I’m 65 now, and Social Security is the foundation of my retirement planning.”
“I think the least painful ‘fix’ would be to remove the cap on earnings subject to FICA tax, just as the cap was removed for Medicare taxes,” wrote Tom Uttormark of Roman Forest, Tex. “Social Security would immediately become solvent for the foreseeable future, and the increase in taxes would fall onto those most able to pay them.”
Robert Hussey of Wake Forest, N.C., wrote: “Eliminate the [income] limit. And if the angry taxpayers are just those affected by a limit, as Rhett Butler said so eloquently, ‘Frankly my dear, I don’t give a damn.’”
John Eyles of Chapel Hill, N.C., wrote: “Eliminate the cap on wages that are subject to the 6.2 percent FICA tax. I’m guessing a lot of Americans don’t even know about this cap, because they don’t make enough money to suddenly see the FICA deduction disappear from their paycheck late in the year or early in the year for very high wage earners.”
“Means testing will limit payments to wealthy recipients,” said Dan Waylonis of Mountain View, Calif.
Tom Irvine of Lewes, Del., wrote: “Raising the retirement age should not be on the table as blue collar working people need the earlier retirement age. With the demise of pensions, it is now even more important that Social Security remains progressive and geared toward the needs of the working class.”
Much of the anguish over Social Security is not new,” wrote Mark Pashia of Sullivan, Mo.“I too worried about it when I was a young worker, but the ‘fix’ in 1984 pushed the problem out into the future. The actuaries calculated the amount needed to get us to 2050 or so and estimated the needed funds increase to do so. I must say they did an admirable job of estimating considering the changes that they could not envision. They could not know that wages would be flat for the next 35 years, or that we would have a major recession second only to the Great Depression, etc. If wages had grown, the minimum wage adjusted for inflation, no monkey business on Wall Street and so on, the taxes raised would have been more than enough.”
Lynn Saxton of Warsaw, N.Y., wrote: “Eliminating the cap on Social Security would go a long way toward eliminating the problem. Do our politicians fear the reactions of the rich, or is it that they are the rich? I am 63 and plan to wait until at least 66 to take my benefits. I certainly hope by then the issue has been addressed.”
But “removing the cap would undermine Social Security by turning it from an earned benefit, which it is now, into mass welfare,” Allan Sloan, a columnist for The Washington Post, wrote recently.
Alan Homer of Mesa, Ariz., listed five ways he thinks Social Security could be made sound.
1. For anyone younger than 50, phase in full retirement age to 68; similar to the previous phased increase from age 65 to age 67.
2. Increase the age of Medicare eligibility from 65 to 67, or at least have a graduated cost for people taking Medicare earlier than 67.
3. Increase both the employee and employer contribution to FICA by one percentage point.
4. Increase the earliest age of Social Security eligibility from 62 to 64.
5. Limit the annual cost-of-living adjustment (COLA) for Social Security recipients to 90 percent of the calculated increase.
“Doing these five actions will put social security in better financial shape,” Mesa said. “Everyone shares in the pain of fixing the issue.”
Your Thoughts
What are your thoughts on the suggested fixes? How much are you willing to give up? Send your comments to Please include your name, city and state. In the subject line put “Fixing Social Security.”
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I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?
If you haven’t retired yet, what concerns you financially?
You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

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