The countdown for a depleted Social Security fund is on. The Social Security Administration has stated that taxes funding the program will only be enough to pay for 75% of benefits starting in 2025. While coming up with solutions to fund the additional 25% has been a hot topic lately, one survey found that 75% of Americans would support a reduction in benefits for higher-income retirees to help fund the difference.
Social Security is a critical source of income for millions of retired and disabled Americans. People are concerned about its looming depletion if no policy changes are made. Several causes contribute to the issue: a declining birthrate has reduced the number of workers paying into the system, Americans are living longer, and wages for middle and lower-income earners have stagnated.
Plus, the influx of Baby Boomers retiring paired with these other challenges is putting a strain on funds.
The University of Maryland’s School of Public Policy recently surveyed 4,677 adults nationwide. The majority of those surveyed were aware of the shortfall and an overwhelming 75% supported the idea of reducing benefits for higher-income earners to even the gap between their benefits and what lower-income earners receive. Beyond that, 53% of those surveyed agreed that benefits should be reduced for the top 40% of earners.
According to the survey, reducing benefits for the top 40% of earners could reduce the shortfall by 23%, offering a significant improvement and a better financial outlook for many Americans, particularly those in lower-income brackets.
While the survey highlights one approach to the solvency crisis, not everyone agrees with it. Critics argue that reducing benefits for higher-income earners is unfair – they contributed the same percentage of their wages as other workers.
“While it’s always tempting to solve financial problems with a program by cutting costs, lowering benefits for any Social Security recipients – even higher-income ones – is a bad decision,” Alex Beene, a financial literacy instructor for the University of Tennessee, told Newsweek. “Not only is it unfair to those recipients who also paid in, but it does distrust among those unaffected that eventually their benefits will be slashed as well.”
While the proposal to cut benefits for higher-income retirees could help ease the Social Security shortfall, it’s unlikely to fully resolve the crisis. Many experts believe that a combination of solutions will be necessary, including increasing revenue through higher payroll taxes or raising the retirement age.
Reducing benefits for a small group of retirees might be a first step, but without further action, it may not be enough to save the program in the long run. Any cuts to benefits could also erode confidence in Social Security, as more Americans worry that their own payments could be at risk.
As Congress and policymakers explore potential reforms, individuals must stay informed about how these changes could affect their retirement plans. Consulting with a financial advisor can help ensure you are prepared for any potential impacts on your future benefits.
