Given the polarizing nature of Social Security funding debates, Republicans and Democrats in Washington have been unable to make meaningful progress on solutions that may shore up this system. But latest research shows that “very large bipartisan majorities” of on a regular basis Americans actually agree on a variety of changes that would strengthen it and ensure advantages will be paid in full for years to return.
And not using a legislative solution, Social Security trust fund reserves are heading in the right direction to be depleted just over a decade from now. At that time, only 83% of advantages can be paid to recipients.
A few of the changes with bipartisan support include ideas which can be typically considered unpopular, like increasing the 6.2% Social Security payroll tax and raising the retirement age, but there is a key caveat. Unlike traditional surveys that simply poll respondents on their support for policy proposals, this one — from the University of Maryland’s Program for Public Consultation — included an academic component.
Participants were asked to read a briefing with details about Social Security taxes, profit structure and the funding issue before answering questions.
The outcomes show there’s hope for the country to return together and solve this issue, but it’s going to take a reckoning with the magnitude of the problem at hand, Ron Gebhardtsbauer, emeritus professor of actuarial science at Penn State, said during a panel session Wednesday on the annual meeting of the American Academy of Actuaries.
“They weren’t asked just the query, ‘What do you consider raising the retirement age?’ You realize, no person’s going to love that concept. Or, ‘What do you consider a giant tax increase?’ No one’s going to love that,” Gebhardtsbauer said. “But what that they had to do, it was like a challenge… [that] says here’s the issue, we got to fill this hole. OK, how are we going to do it?”
Listed here are the 4 proposals which can be broadly supported by Republicans and Democrats within the survey, which oversamples swing states:
- 87% support subjecting wages over $400,000 to the Social Security payroll tax
- 86% support steadily increasing the payroll tax from 6.2% to six.5% over six years
- 89% support steadily raising the retirement age from 67 to 68 by 2033
- 92% support reducing advantages for the highest 20% of earners by income
Put together, these 4 changes would address 101% of Social Security’s 75-year funding shortfall, which would offer a snug buffer from an actuarial perspective, in line with the report.
The primary of those proposals is in keeping with the Biden-Harris administration’s policy stance, and the $400,000 figure correlates with its pledge not to boost taxes on anyone below that income threshold.
The thought can be to create a “doughnut hole” for payroll taxes, Aaron Cirksena, founder and CEO of MDRN Capital, recently told Money: “You are taxed as much as $168,600, then there’s not tax from $168,600 to $400,000, but then from $400,000 and anything above… is getting taxed again.”
The opposite three proposals — increasing the payroll tax rate, raising the retirement age and reducing advantages — lack support from each candidates within the upcoming presidential election.
Budget proposals from the Republican Study Committee, the big House GOP caucus, call for steadily increasing the retirement to 69. The retirement age determines when persons are eligible for full Social Security advantages. You may currently claim advantages as early as 62, but your payouts can be reduced should you claim before 67.
Despite the recent gridlock on Social Security fixes, on the meeting of actuaries, one other speaker, Stephen Goss, chief actuary on the Social Security Administration, referred to the financial shortfalls this system is facing in the long run as “very remediable.” The survey data above above suggests there could also be more room for consensus that previously thought.
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