Social Security’s future isn’t a new topic on the table—it’s known that the program is facing significant funding challenges down the road. Without intervention, by 2035, the fund will only be able to cover 83% of its promised payouts, as per the latest forecasts from the trustees. Recent legislative moves, including the Social Security Fairness Act—which aims to enhance benefits for over three million workers who also draw public pensions—could potentially bring this critical point forward by six months.
A survey delved into how over 2,200 Americans, who largely see Social Security as a crucial part of their retirement income, think the issue should be addressed. The broad consensus, with 85% of respondents, leans towards keeping or even increasing benefits, even if this requires a tax hike for certain or all taxpayers. This data comes from a collaborative survey conducted by the National Academy of Social Insurance, AARP, and others.
Tyler Bond, research director for the National Institute on Retirement Security, pointed out that many people are willing to pay more not to enhance their own benefits, but to avoid sweeping cuts. On the flip side, 15% of those surveyed would rather avoid tax increases, even if it means reducing benefits.
Respondents were presented with various policy options to consider how to bridge the funding shortfall. Surprisingly, preferences for change transcended political lines, income brackets, age groups, and educational backgrounds. The most favored option was to scrap the cap on payroll taxes for those earning above $400,000. This year, earnings up to $176,100 are subject to Social Security taxes, after which contributions halt.
This proposal suggests reinstating the tax starting at $400,000 in earnings, without awarding additional benefits to those paying more. Another near-favorite solution was increasing the payroll tax rate from the current 6.2% for both employees and employers to 7.2%.
Respondents also voiced support for policy adjustments that could enhance benefits, like refining the annual cost-of-living adjustment to reflect senior spending accurately, rewarding caregivers who temporarily leave the workforce, and providing benefits to ease early retirement cuts for workers in tough physical jobs. On the other hand, reducing benefits for higher-income individuals was least popular—impacting those with retirement incomes over $60,000 and couples earning more than $120,000, excluding Social Security.
Implementing these changes could not only close the funding gap but even give a slight surplus according to Bond. Interestingly, alternatives such as raising the retirement age, broadly increasing benefits, or altering the taxation of benefits did not find favor among the survey participants.
This conversation comes at an opportune moment, aligning with another NIRS report that analyzed public opinion on Social Security spanning over 40 years. The findings highlight a consistently strong belief in the value of the program. Bond noted that public sentiment isn’t just about valuing Social Security—people want to ensure its security for future benefit recipients. Generally, confidence in the continued provision of benefits grows as individuals near retirement age.
