Restoring and Modernizing Social Security through Sustainable Reform
Social Security faces real and increasingly urgent financial challenges. Reform is not only the wise thing to do, it is critical to ensure that Social Security remains solvent and fiscally sustainable and can continue to provide retirement security for generations to come.
Social Security reform must not only address the program’s fiscal solvency issues but also remove the disincentives to working later in life. This means reforms must focus on reining in the growth of program costs, encouraging personal saving and investment, and rewarding those in middle and early retirement age who make the decision to extend their working careers.
Finally, Social Security reform must begin immediately. We can reform this critical program, and we can do it in a way that will improve the financial security of all future Americans in retirement. But we must act now. The Social Security trust fund for the retirement portion of the program is projected to become insolvent in 2035, while the disability trust fund is projected to become insolvent in 2023, less than a decade away. To close the current financial shortfall of the combined trust funds would require an immediate 21 percent increase in the OASDI payroll tax rate (from 12.4 percent to 14.98 percent) or an immediate 16 percent cut in benefit payments (19.6 percent if applied only to new beneficiaries after 2016). The magnitude of the changes necessary will only increase with time.