The projected shortfall for the nation's Social Security system -- $5.3 trillion over the next 75 years -- would seem to be overwhelming.
Yet a new congressional report offers possible solutions that, if implemented soon, will erase the shortfall and put Social Security back on solid financial footing.
The key is to take action now. The longer Congress waits to address this critical issue, the more painful the solution.
Any changes to Social Security, whether it involves increasing the tax or delaying when benefits can be drawn, carries with it political risk.
Currently, 53 million Americans get Social Security benefits averaging $1,067 a month. In 75 years, 122 million, or one-fourth of the population, will be drawing benefits.
We, as a nation, can't delay action to keep Social Security out of the red.
Sen. Herb Kohl, chairman of the Senate Special Committee on Aging, called the various proposed changes small "tweaks."
"Modest changes can be made over time that will keep the program in surplus," Kohl, D-Wis., told The Associated Press. "They are not draconian, as the report points out, and they can be done and will be done."
Social Security is currently financed by a 6.2 percent payroll tax on wages below $106,800. The tax is paid by workers and matched by employers.
The committee found that the projected $5.3 trillion shortfall would be eliminated if payroll taxes were increased by 1.1 percentage points for both workers and employers over a 20 year period. It would also disappear faster if wages higher than the $106,800 threshold were taxed.
On the benefits side, more than three-fourths of the shortfall would vanish if Congress reduced annual cost-of-living increases by 1 percentage point each year, The Associated Press reported. Social Security recipients get annual increases based on inflation.
And about one-quarter of the shortfall would be gone if Congress gradually increased the age when retirees qualify for full benefits from 67 to 68. Nearly a third of the shortfall would disappear if the full retirement age were gradually increased to 70.
These and other suggestions can be mixed and matched to change the Social Security system only slightly but add up to huge savings.
But whatever solution is adopted by Congress it needs to be monitored closely and revisited in no fewer than five years. If the changes are falling short of projections then action can be taken to make sure the nation is taking the correct path.
Keeping the Social Security system financially sound is critical.
The first step is to take action, and do it quickly.
If Congress waits, these proposed "tweaks" will have to grow larger and more onerous. Now is the time to fix Social Security.
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