Social Security – The Problem
The Social Security program received $859 billion in tax revenues in 2016. By 2026, the Social Security program will require an additional 33% of tax revenues. By 2040, an additional 42%3.
Current projections estimate Social Security benefit payments will collapse in the following order3:
2022 – Disability Insurance Trust Fund
2029 – Combined Trust Funds
2030 – Old-Age and Survivors Insurance Trust Fund
Social Security is running out of money, in part, because of the following factors:
Retiring Baby Boomers
As of January 1, 2011, 10,000 baby boomers are estimated to reach age 65 every day for the next 19 years. By 2030, 18% of the nation will be over the age of 65 compared to about 13% today4.
Longer life spans
The average life expectancy continues to rise and now stands at 78.94 years. This is a full 9 years longer than the life expectancy of 70 years in 19605.
Rising requirements in disability benefits paid: In 2015, 10.2 million people received disability benefits averaging $1,165.79 per month. 10 years prior, the numbers stood at 5.9 million people who received an average of $938 per month6.
Social Security – Potential Solutions
Reduce disability payment dependency with non-traditional workforce solutions.
For recipients who are physically disabled, work opportunities in call center services may be an option. There are an estimated 2.2 million call center workers in the United States7. India employs an estimated 3.1 million workers, while the Philippines broke the 1 million worker mark in 20157.
Finding non-physical work in the private sector and supplementing 50% pay at $15 per hour for 20% of the physically disabled would drop the payment requirements of 2015 by $14.3 billion dollars per year while increasing income of these non-traditional worker recipients by an average of $8,600 per year. This would capture or create about 2.05 million jobs in the United States. This would also increase taxable income by $31.9 billion resulting in about $4.9 billion in incremental tax revenue.
- Social Security tax revenues received: $863.9 billion (adjusted 2016 figure).
- Social Security outlays: $890 billion (adjusted 2016 figure)
- Reduction in deficit to: $26.1 billion
Remove maximum contribution base, which is currently set to $118,500.
Removing the Social Security tax ceiling would generate an estimated $100 billion in additional funds annually7.
- Increased tax burden on upper-middle and upper class citizens, with diminishing benefits for more wealthy Americans.
- Social Security tax revenues increased by: $100 billion
- Social Security surplus: $49 billion
Increase full retirement age to 70 years of age.
When the Social Security program was established in 1930, the life expectancy for men was 58 and 62 for women. The full retirement age was 658. Since the 1930s, life expectancy for men has risen to 76 and 81 for women. While an unpopular and unfortunate proposition, it may be worth considering to conserve the Social Security program for individuals post-2030.
- Reduction in Social Security outlays of: $67.3 billion (in 2000 study)
- Social Security surplus: $16.3 billion
- Loss of Social Security and Medicare coverage for estimated 7.12 Americans9.
Next on the list: Health Care
2 Center on Budget and Policy Priorities. 2016. Policy Basics: Non-Defense Discretionary Programs.
3 Congressional Budget Office. 2016. CBO’s 2016 Long-Term Projections for Social Security: Additional Information.
4 Pew Research Center. 2010. Baby Boomers Retire.
5 World Bank. 2016. Life expectancy at birth, total (years).
6 Social Security Administration. 2016. Annual Statistical Report on the Social Security Disability Insurance Program, 2015.
8 Social Security Administration. Social Security History.
9 Wittenberg, Stapleton, Scrivner. 2000. How Raising the Age of Eligibility for Social Security and Medicare Might Affect the Disability Insurance and Medicare Programs.