William E. Kelly
The inadequacy of social safety nets intended to protect a burgeoning population of older adults is a political, cultural and moral hot potato. Advancements in medical science, means a rapidly expanding number of us will be living longer. We will do so with more expensive medical issues and rising living expenses dependent on inadequate incomes and declining assets. At the same time, our younger population is experiencing a decline in numbers. This translates to more of us relying on those safety nets and fewer of us to replenish the funds to sustain them.
Social Security was designed to supplement savings and pensions as we retire. It was never intended to replace them. Social Security taxes are collected from worker paychecks. If self-employed, the individual pays 100 percent of the taxes due. If employed by another, the employer and employee each pay half of what is due. In 2018 Social Security tax is 6.2 percent of the first $128,700 of wages or a maximum of just under $8k a year. Those funds are used to purchase interest bearing U.S. Treasury bonds. The U.S. government pledges to protect and grow the funds collected so that principal and interest remain sufficient to keep the Social Security Trust Fund solvent. But it is projected that this holds true for only another year or two (2019-2020) before Social Security needs to begin redeeming the bonds to cover benefits.
Two years ago, Social Security trustees of the funds projected that by 2034, absent any changes to the law, benefits would need to be reduced by roughly 79 percent of current levels to remain solvent. In 2014, $785.6 billion came into the Fund and $848.5 billion was paid out in benefits. Social Security was able to make payments in excess of its tax income because of interest income earned on the Treasury Bonds. That scenario has been reversed and it is projected that the Social Security taxes collected, and interest earned will be spent down without reforms. This means benefits paid out to future recipients and some currently receiving benefits will need to be reduced as early as 2034. That cannot be allowed to happen. To do nothing invites unnecessary suffering, social unrest and a decline in the standard of living Americans have come to expect and as a nation we can very well collectively afford, even as too many individuals cannot.
Two graphs published in an extensive 43-page report by the Social Security Administration last September, pretty much tell the story. (The link to that report is: bit.ly/2J2vzYq).
In 2010, tax and other non-interest income did not fully cover the costs of programs, and the 2017 Trustees Report states, “Social Security is not sustainable over the long term at current benefit and tax rates.” Post–World War II baby boomers are retiring at rates that will double in the next 50 years. In 2016, 2.8 workers were paying into Social Security for each person collecting benefits. By 2036 the ratio falls to 2.1 to 1 and without changes in the pattern this ratio will continue to decline for the next 75 years. Further, estimates show the Social Security Trust Fund reserves will be depleted by 2034 when income flowing into the fund will cover only about 77 percent of program costs.
There are four possible ways to cover the Social Security Fund short-fall: increase revenues (taxes) by raising the percentage withheld and/or raising the maximum amounts subject to the tax; reduce the benefits paid to recipients; increase the rate of return on the invested Social Security Trust Fund and or some combination of the other three options.
Higher payroll tax means lower pay checks and the risk of lower future raises due as employers try to cover the raise in their part of the tax. Lower benefits mean fewer Social Security and other safety net funds for our elder recipients, many of which are already unable to survive on currents benefit checks. With certainty, lower worker take-home pay decreases individual ability to remain financially independent. But decreasing Social Security benefits also puts an increased financial burden on family caregivers working to have financial independence during their own retirement years.
It is no secret that there is and continues to be a strong push from the current Washington, D.C. administration and a cry across the nation to reform our social safety nets in ways that will result in considerable and totally unnecessary suffering and loss for millions of Americans — in particular the senior population who are outliving their assets, their off-spring, or others left with the responsibility of supplementing the costs of and providing more of the measures that permit our elders to live out their retirement years with safety, security, care, dignity and respect?
It remains to be seen if Social Security and other safety net taxes we are forced to pay, and the interest earned will remain sufficient to help supplement the costs. Of one thing I am certain, poverty, homelessness and anger allowed to rise until trust in our political, medical and social systems implodes and then explodes into mass desperation, depression, hopelessness, civil unrest and rebellion is not a viable option. Of necessity, attitudes and expectations need to be adjusted to resolve existing challenges facing Social Security and our current system of social safety nets. I reiterate, we are certainty collectively capable of far better than what this picture paints but far too many individuals are not capable.
The truth is, that as a whole, we simply did not anticipate and plan ahead as individuals or as a society for these eventualities. But social safety nets are necessary to assist people of all ages who for whatever reasons fall on “hard times.” It is neither a humane nor a cost-effective solution to alternatively imprison, institutionalize, dispose or simply leave to fate all those less fortunate for any reason. Unemployment, poverty, drug and alcohol abuse, lack of education, lost opportunities, crime, homelessness, mental illness, depression and disease are far costlier on every level than addressing the causes and treating these societal ills to minimize the number afflicted.
Those of us who possess and benefit from the ability and opportunity to remain largely self-sufficient need to be more compassionate for and assist those who do not and provide increased opportunities to those who with help could become self-sufficient. In any case, there is a cost to do nothing. That cost will be in dollars or the quality of life we have as a society or some combination of both. The questions are: when we do each have enough and what responsibility do we have to see to it that those who do not are not left behind to become a further burden to society or themselves. Think about it!
A note of caution: Seniors and their caregivers represent the largest voting block and whether you vote, for whom and what you vote for during the June 5 primary. Who you endorse and vote into office determines what comes next. Be very careful and understand how your vote will impact your life and that of your neighbors and family.
—Bill Kelly is a longtime local activist who currently focuses on LGBT senior issues and moderates the Caring for our LGBT Seniors in San Diego Facebook page. Access to the group is free to all seniors, their advocates, families, friends and caregivers. Reach Bill at firstname.lastname@example.org.