Aside from the 2035 problem, Social Security is already on track to replace less pre-retirement income for today’s younger workers than for today’s retirees. That is attributable, mainly, to the last major changes to the program, which were enacted in 1983. That legislation put in motion a gradual increase in the Full Retirement Age, or F.R.A. — the age when you qualify to receive 100 percent of your benefit. Before 1983, the F.R.A. was 65, but for everyone born in 1960 and later, it is 67. Every year increase in the F.R.A. equates roughly to a 6.5 percent cut in benefits.
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Workers have responded, to some extent, by delaying their benefit claim. In 2021, 31 percent of retired worker claims were made by people age 62, down from 60 percent in 1998, according to an analysis of Social Security Administration data by Mr. Johnson. But 84 percent of workers had claimed benefits by age 66.
Republicans and Democrats have starkly different visions for how to avert insolvency for the trust funds.
As a candidate for president, Mr. Biden proposed adding a new tier of payroll tax contributions for people with incomes over $400,000. That would extend solvency by roughly five years. The Social Security 2100 Act, sponsored by Representative John Larson, Democrat of Connecticut, enjoys widespread support in the Democratic caucus. It mirrors President Biden’s payroll tax proposal.
Social Security 2100 includes a 2 percent across-the-board boost in benefits, and it would shift the annual cost-of-living increase to a more generous formula. It also includes targeted benefit increases such as a new minimum benefit level for very low income seniors, and improved benefits for widows and widowers. It also would provide caregiver credits that increase benefits for people who take time out of the work force to care for dependent family members.
Just this week, Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts introduced the latest version of their own Social Security proposal. It would extend solvency by 75 years, give nearly all beneficiaries an increase of $200 per month through a revision in the benefit formula and adopt a more generous annual cost-of-living increase. It would be funded by applying current FICA tax rates to incomes above $250,000, and with two new taxes on investment income.
How about the Republicans’ plans?
President Biden provoked an uproar by calling out a proposal made last year by Senator Rick Scott of Florida that calls for “all federal legislation to sunset in five years” and would “force Congress to issue a report every year telling the public what they plan to do when Social Security and Medicare go bankrupt.” Senator Ron Johnson of Wisconsin also has suggested that Congress review spending on the two programs regularly.
