It's official: High unemployment and a resulting decline in payroll-tax collections have taken a toll on the Social Security program. Benefits exceeded revenues for the first time in 2010–six years ahead of previous projections–according to the Social Security Trustees' 2010 report. But the nation's vital retirement program is expected to slip back into the black–at least temporarily–when the economy recovers, before posting increasingly larger deficits as more baby-boomers reach retirement age.
Projections suggest that there will still be plenty of reserve funds to continue paying full benefits for nearly 30 years. But without reform, the trust fund is projected to run dry around 2037, when tax revenues may only be sufficient to pay only about three-fourths of promised benefits. "The sooner action is taken, the more options will be available and the fairer reforms will be to our children and grandchildren," said Treasury Secretary Timothy Geithner in response to the trustees' report.
Reform proposals include raising the retirement age for full benefits to age 70, changing the formula for calculating annual inflation adjustments of benefits, and lifting the cap on the amount of wages subject to Social Security tax–currently $106,800–to upwards of $185,000. While each of these proposals would effectively equate to a “disguised cut” to our Social Security benefits, it is clear that something must be done, sometime, to improve the long-term health of our county’s social insurance system. The only question facing this eventuality is whether the political commitment to make these necessary changes yet exists?
- James M. O'Reilly, Certified Elder Law Attorney