The future of Social Security has been a growing concern, with projections showing that the system could become insolvent by 2035. According to the Social Security and Medicare Boards of Trustees, unless significant policy changes are made, Social Security will only be able to pay 79% of scheduled benefits beyond that year. This potential reduction in benefits could have serious implications for millions of Americans, especially those heavily reliant on Social Security for their retirement or disability income.
As the 2024 presidential election approaches, voters are paying close attention to how candidates plan to address the future of Social Security. The outcome of the election could significantly shape what happens next, and several scenarios are being considered, ranging from best-case to worst-case possibilities.
Stakes
If Social Security becomes insolvent and benefits are reduced to 79%, the impact on Americans who rely on this support would be profound. Many already struggle to make ends meet with their current benefits, and a cut would severely affect their quality of life. Makini Chisolm-Straker, a former White House Fellow, emphasized the urgency, saying, “A decrease in benefits is not a survivable option for benefit recipients, given the already low amount of fiscal support they are receiving.”
With so much at stake, the 2024 election could have lasting consequences for the future of Social Security.
Best-Case Scenario
In the best-case scenario, the economy would improve, boosting employment and wages, which in turn could help bolster the Social Security fund. Colin Ruggiero, co-founder of DisabilityGuidance.org, suggests that a thriving economy could have multiple positive effects on Social Security:
- More jobs could be created, increasing the number of people contributing to the system.
- Wages might rise, allowing workers to contribute more to the fund.
- As a result, the Social Security trust fund could be better funded, delaying or even averting future benefit cuts.
However, this outcome is heavily dependent on economic conditions and policies that foster growth. While economic improvement would be ideal, it is uncertain and may not address the deeper structural issues facing the Social Security system.
Status Quo
Many experts, including Kelly Gilbert, owner of EFG Financial, believe that the most likely and potentially worst-case scenario is that nothing significant will change. Gilbert notes, “Social Security reform is desperately needed, but it remains a highly sensitive topic for politicians. Anyone who proposes a fix for Social Security risks being demonized by their rivals.”
This means that after the 2024 election, we could see the status quo continue, with no major reforms to address the impending insolvency. Kicking the proverbial can down the road could lead to greater financial pressure on the system, pushing Social Security closer to insolvency without a clear solution in sight.
Payroll Tax Increases
Another possibility is an increase in Social Security payroll taxes, especially for high-income earners. Currently, only wages up to $168,600 are subject to Social Security taxes. Experts believe that raising this cap could generate additional funds to support Social Security.
Ruggiero commented, “I believe the next likely scenario would be an increase in Social Security payroll taxes for people earning higher salaries — over $168,600 a year. This would ensure that wealthier individuals are contributing a fairer share towards Social Security.”
Increasing payroll taxes is a politically contentious issue, but it’s one of the most straightforward solutions to extending the solvency of Social Security. While this could be an effective measure, it would require strong bipartisan support, which has historically been difficult to achieve.
Expert Insights
Social Security reform has long been a political hot potato, with few leaders willing to champion major changes due to the fear of political backlash. Any effort to fix Social Security involves tough decisions, such as raising taxes, reducing benefits, or changing the retirement age — all of which are deeply unpopular. As a result, meaningful reform may be delayed, leaving the system vulnerable to the looming insolvency.
Gilbert and Ruggiero both highlight that inaction is the most probable outcome. With politicians reluctant to address the issue head-on, we could see the next president and Congress avoid taking meaningful steps to reform the system, even as the financial outlook worsens.
What’s Next
As voters consider their options in the 2024 election, it’s crucial to weigh the candidates’ positions on Social Security. The future of the program depends on policy changes that are currently politically fraught. Without decisive action, millions of Americans could face a future where their benefits are reduced, creating widespread financial hardship.
The best-case scenario would see economic growth and increased wages helping to strengthen Social Security, while the worst-case scenario — and perhaps the most likely — is that no significant reforms take place, allowing the problem to persist.
FAQs
What will happen to Social Security if no changes are made?
If no changes are made, Social Security is expected to pay only 79% of benefits starting in 2035 due to insolvency.
Could the 2024 election impact Social Security?
Yes, the policies and priorities of the next president and Congress could shape Social Security’s future and whether reforms are enacted.
What are possible solutions to Social Security’s funding issues?
Potential solutions include raising the payroll tax cap, cutting benefits, or increasing the retirement age.
Why is Social Security reform politically difficult?
Proposing changes to Social Security is politically risky, as raising taxes or reducing benefits are unpopular moves that could hurt politicians at the polls.
When is Social Security expected to become insolvent?
The Social Security trust fund is projected to become insolvent by 2035, after which it would only be able to pay 79% of scheduled benefits.
