How to Fix Social Security, According to Retirement Expert

The Social Security Administration’s (SSA) reserves could run out within the next decade unless major action is taken, a retirement expert has warned.

Burt Williamson, a retirement specialist with PlanPrep, said that the government agency is approaching a situation similar to that of 1983 when funding was almost depleted, resulting in significant but quick reforms being pushed through.

Recent polling conducted on behalf of Newsweek by Redfield & Wilton Strategies found that the vast majority of people were concerned over whether their Social Security retirement benefits would be reduced before they stop working. And Social Security’s trust fund could dry up by 2034, according to an October 2023 report by the American Academy of Actuaries (AAA).

If so, it would mean the largest welfare program in the U.S. could only pay 80 percent of the benefits for millions of recipients. The 2022 Social Security Trustees report made similar findings, predicting that retirees will only receive 77 percent of their pension in 2034 if action is not taken. Newsweek has contacted the SSA for comment via email outside of normal working hours.

What happened to the SSA in 1983?

Reforms enacted in 1983, under President Ronald Reagan, were expected to ensure the SSA’s solvency through to 2060. According to the SSA, solvency “is defined as the ability of the trust funds at any point in time to pay the full scheduled benefits in the law on a timely basis.”

“Right now, there’s about 10 years to fix the problem,,” Williamson explained. “Back in 1981, President Reagan had less than three years before the retirement trust fund was expected to run out of money.” Rampant inflation, among other economic turmoils, were to blame. Williamson said that there were “three preceding cost-of-living increases of 9.9 percent, 14.3 percent and 11.2 percent from 1979 to 1981,” meaning that at the time “all three trust funds—retirement, health care and disability—were going to run out.”

In a nutshell, a bipartisan commission was established to investigate Social Security’s short and long-standing issues and deliver a solution that would extend its solvency well into the future—originally pinned at 2060, almost 80 years in the future. Solutions included a raise in payroll tax, requiring government employees to pay into Social Security for the first time, and raising the retirement age to 67, which it reached in 2022 for those born in 1960 or later.

While lawmakers still have considerably more time at this stage to consider a solution, the economic climate of the decades since 1983 and demographic changes have now resulted in a near 30-year cut to the date when funds were previously expected to run out, according to the AAA’s calculations.

How Can Social Security Be fixed?

Williamson said current inaction would likely lead to the same Social Security situation as in the 1980s. “It’s understandable why people would be concerned about their future Social Security benefits, as Congress is not going to remedy the problems proactively. History is going to have to repeat itself,” he told Newsweek.

Williamson recommends three key areas in which the government can avoid cutting benefits to current Social Security claimants: “delaying the start ages for retirement benefits by a few years for younger workers, eliminating the cap on the wage tax (OASDI) affecting the top six percent of wage earners, and setting a cap on the maximum benefits payable to anyone, regardless of the amounts contributed.”

He also predicts that a new commission, similar to the events in 1983, will be set up to deliver results that will avert the looming crisis. “Fast forward into the future, this time to 2031 or 2032, and the president at that time likely will have to appoint a new commission—history repeating itself—to come up with new findings that will give Congress another way to avoid blame for the changes that will be made,” Williamson said.

“That’s the only way I believe any major solutions are ever going to take place for Social Security. ‘We are going to cut the benefits of 80 million American voters’ would not be a very good campaign slogan for anyone who wants to get reelected.”

What Happens if Social Security Isn’t Saved?

A scenario in which benefits will stop being paid altogether is not on the horizon. However, should no action be taken, the SSA will receive income from payroll taxes sufficient to cover only about 80 percent of benefits.

The prospect of lawmakers not delivering some sort of solution is unlikely. Expert bodies like the AAA have offered numerous solutions that could spell an end to the SSA’s considerable problem, including a combination of tax increase and benefit cuts.

However, regardless of the methods used to arrive at a conclusion, it seems unanimous that experts and relevant bodies believe action should be taken sooner rather than later on the issue. “Policymakers have only 11 years left to restore solvency to the program, and the longer they wait, the larger and more costly the necessary adjustments will be,” a report by the Committee for a Responsible Federal Budget warned in March 2023. “Acting sooner leaves more options available, allows for more gradual phase ins, and gives workers time to plan and adjust.”