Waiting to Fix Social Security Just Increases the Pain, GAO Warns
What You Need to Know
If no changes are made, Social Security benefits could be reduced by nearly 25% in less than a decade.
The earlier the course correction, the more gradually changes can be phased in, giving workers more time to adjust.
According to the GAO, Congress will need to evaluate a range of different potential reform options.
There is broad-based agreement that the Social Security system is in dire need of a course correction, with the main trust fund used to support the payment of retirement benefits currently on track to run dry by 2033.
Despite the clear need for reform, policy experts see no signs that Democrats and Republicans in Congress will be able to strike a deal to “save” Social Security anytime soon. Far more likely, they say, is ongoing posturing and electioneering that treats Social Security’s funding shortfall as more of a political football than the pressing crisis that it is.
A new report published Thursday by the Government Accountability Office bemoans the stalemate, warning in no uncertain terms that every day that goes by without a fix for Social Security just deepens the hole from which the program will have to be rescued.
Taking action today, the GAO says, would both reduce the scope of changes needed and give future retirees more time to adjust their plans.
Social Security’s Funding Deficit
As highlighted in the GAO’s new analysis, the costs for Social Security’s benefit program for retirees — which are paid from the Old-Age and Survivors Insurance Trust Fund — have been exceeding the program’s tax revenues since 2010, and they are projected to continue doing so.
Unless action is taken, the GAO warns, the program is projected to be unable to pay full scheduled benefits in just 10 years. At that time, benefits would need to be cut by between 20% and 25%, depending on the economic assumptions one takes into account.
What is indisputable, according to the GAO, is that taking action sooner rather than later is the right and rational thing to do. As the report spells out, for nearly 90 years, American workers and their families have counted on Social Security benefits to pay their bills and maintain their standard of living in retirement.
Allowing the program to fall into fiscal turmoil would not only jeopardize the retirements of millions of households, but it could also lead to broader economic instability and deeply erode the trust and confidence working Americans have in the federal government.
The Stakes Are High for Retirees
According to the GAO, many Social Security beneficiaries rely on the program for the majority of their income while retired — but that doesn’t mean retired Americans are living lives of luxury. Instead, Social Security represents a lifeline that keeps millions of retired Americans above the poverty line, if only barely.
