Oldsters, beware 2033

We're just a few years away from Social Security's bankruptcy. What are your elected leaders in Washington doing about it?

What will you be doing in the year 2033?

If you’ll still be younger than 67 years of age, there are innumerable answers. But if you’re 67 or older by then, chances are the Number One item on your mind will be how in heaven’s name you’re going to make ends meet.

That’s because 2033 is now the year the Social Security and Medicare trustees calculate the trust fund will go bust. Incoming revenues will drop below what the fund needs to make its payouts.

When that happens, law requires Social Security to slash its payments to recipients to just 77 percent of their scheduled level. Two-thirds of America’s seniors—about 75 million of us—rely substantially on their monthly Social Security check for their daily living expenses.

Bottom line: the average Social Security check is now about $2,000. In 2033, average older Americans trying to get by with a monthly check of that amount will see it cut by about $460, to a new reduced level of $1,540 or so.

Meanwhile, unless current trends change, inflationary costs will continue to rise.

(Note: The annual cost of living adjustment [COLA] in Social Security payment levels increases the benefit a few percentage points every year, but inflation generally wipes out the net gain to the beneficiary.)

What are our elected leaders in Washington doing about what’s coming in just eight years?

Nothing. The silence deafens.

It isn’t as though the cliff’s approach is a surprise. For decades analysts have warned it’s coming. A primary cause is the huge number of Baby Boomers entering the Social Security payout bracket. The Baby Boom era began in 1946, after World War Two. The Boomers’ eligibility seriously degrades the ratio of Social Security recipients to contributors. Without Congressional action, we can’t avoid the coming cliff.

Raising the retirement age to 70, an idea with some support among conservatives, would buy a little time but not solve the basic problem: that Social Security takes in less money from payroll taxes than it pays out in benefits. Conservatives also flirt with transitioning the program into more individual private investment accounts, sort of like 401(k) plans. But that option would unavoidably leave seniors who are unfamiliar with financial markets open to fraud or third-party mismanagement of their retirement income, with no recourse.

In addition, American fertility rates are dropping, thereby eventually trimming the number of workers contributing to the fund.

Social Security represents a massive share of the federal budget, about 21 percent. In dollar terms that’s about $1.5 trillion.

To make the situation even more dire, government statisticians have also moved the Medicare crisis date up by three years, to the same 2033 date as Social Security. At that point Medicare would be able to pay only 89 percent of its benefits. And health care cost increases show no sign of slowing down.

Both Republicans and Democrats avoid Social Security as a political topic at all cost. With good reason. Increasing the Social Security and Medicare trust’s income through raising either the salary cap or the percentage of withholding from paychecks runs into strong political headwinds, as do tightening up the fund’s payout requirements or raising the eligibility age. All those options would ease the pressure on the fund, but few candidates have the courage to broach any of them.

It’s patently obvious that the path to a longer future for Social Security and Medicare solvency runs through bipartisan cooperation. Neither party wants to be stamped the party of heartless treatment of older Americans. Bipartisanship would erase that liability. Sadly, the current bitterness on both sides in Congress and the White House leaves little hope for such cooperation, and besides, politicians these days seem to thrive on procrastination.

But Social Security’s vulnerability gets worse the longer it goes unchecked. The trust fund shrinks more every year. The longer that continues, the more jarring will be the remedy when it finally comes, or when the unthinkable arrives: the end of Social Security and Medicare.

When you have the opportunity, ask federal candidates how they intend to fix the looming Social Security shortfall. If they simply blame the other side, that’s not an answer—it’s a copout.