Social Security is facing a deadline.
The nation’s Social Security Trust Funds reached $2.8 trillion in reserves by the end of 2015. That value is expected to peak at $2.9 trillion in 2020. Afterward, reserves will need to be drawn down in order to pay recipients full benefits. Each year the reserves will shrink until, in 2034, they are depleted.
According to the program’s trustees, if Congress can’t come together to find a solution to the problem, future retirees could face an automatic benefit cut of nearly 25 percent beginning in 2034.
If such a cut happened today, it would nearly double the number of Iowans age 65 or older living in poverty, adding an estimated 24,600 more people who would depend on taxpayer-funded entitlements to access health care, pay their utilities and purchase food.
The cut would impact more than 600,000 Iowans — workforce retirees, the disabled and families receiving survivor benefits — and erase significant resources from local economies.
So, without changes, Social Security revenue, which primarily comes from payroll taxes, will be enough to pay 79 percent of benefits in 2034, and that percentage is expected to decrease over time.
It’s a problem that needs to be addressed, and soon.
AARP has been trying to raise awareness through their “Take a Stand” campaign. Instead of advocating for a specific solution, the group offers information about a host of possibilities and is encouraging citizens to ask federal candidates to detail their own plans for maintaining Social Security Trust Funds.
“We really want to begin the process now because right now we have time for thoughtful discourse,” AARP Iowa director Kent Sovern told us at a recent editorial board meeting.
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The sooner Congress acts, the less severe any changes will likely need to be. This is especially true if lawmakers decide to increase Social Security revenue through additional payroll taxes. Changes made next year, for instance, could be phased in over a 10-year period.
Residents should get involved, and consider attending AARP’s Social Security solutions forum starting at 11:30 a.m. on Monday at The Hotel at Kirkwood Center. There, attendees can review and discuss existing proposals. Complete the required registration by calling (877) 929-8300.
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