April 17, 2014

Social Security

For over 65 years Social Security has provided a vital floor of protection. Its broad range of retirement, disability, and survivors' benefits for millions of Americans makes it an important issue for people of all ages (for more see: "What is Social Security?").
However, changing demographics render the current pay-as-you-go system fiscally unsustainable and generationally inequitable over the long-term. Reversing this trend will require facing up to some hard choices and making far-sighted decisions. The sooner we face up to this task the easier it will be.

Social Security's long-term imbalance

Today, Social Security taxes are running ahead of benefits. But in the next few years, the annual excess will start to fall and by 2017 there won't be any excesses at all. From then on, widening deficits are projected for as far as the eye can see. At first, the gap between promised benefits and dedicated revenues will be relatively small, but it will grow very quickly as those who were born in the peak of the baby boom begin to retire in large numbers during the 2020s. The Social Security Trustees project that the annual shortfall will grow to around $250 billion by 2030 in inflation adjusted dollars and that the program's cost will grow from roughly 4 percent of the nation's gross domestic product (GDP) today to around 6 percent in 2030. While seemingly a small increase, it means Social Security will draw nearly half as much more out of the economy in 2030 as it does today. When figured as a share of workers' pay (taxable payroll), Social Security will require 50 percent more from workers' wages as it does today.

 

 

The Concord Coalition's Series on Social Security Reform

 

 

 

  1. Reform Should Not Wait For a Crisis
  2. Trust Funds Mask the Problem
  3. A "One Percent" Tax Increase Will Not Fix the Problem
  4. How Should We View the Problem?
  5. A Real Fix Requires An Increase in National Saving
  6. There is No Free Lunch
  7. Automatic Cost Growth Drives the Problem
  8. Private Accounts: Should They Be Voluntary or Mandatory?
  9. Raising the Social Security Taxable Earnings Cap: Real Reform or Another Placebo?

Statements

Issue Briefs

Selected Charts


Social Security Primers

In 1998 we published two primers discussing the problems associated with Social Security, as well as a framework for a solution. If you are interested in getting a deeper understanding of the problem, and a general template for a solution, please check them out.