6 Ways to Fix Social Security

Here's the problem with Social Security: the money coming in is no longer enough to pay full benefits. Workers currently pay into the system through a payroll tax of 6.2% on up to $118,500 of earnings in 2015; employers pay another 6.2%.

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Here's the problem with Social Security: the money coming in is no longer enough to pay full benefits. Workers currently pay into the system through a payroll tax of 6.2% on up to $118,500 of earnings in 2015; employers pay another 6.2%. If more money comes in than goes out (as it has in the past), the surplus goes into a trust fund, which is invested in special Treasury securities. Interest on the securities fattens the fund, as does a tax on benefits for some beneficiaries.

But people are living longer and fewer workers are around to support them. Since 2010, the Social Security Administration has been using the interest on its securities to cover the shortfall. Without a fix, it will have to start redeeming the securities themselves by 2020; the fund will run dry in 2033. At that point, payroll taxes plus the tax on benefits will cover only three-fourths of the full benefit.

Despite dire predictions, partisan disputes and a natural tendency to procrastinate, Congress is not about to let Social Security go south. And when it does decide to fix the social insurance program, the ideas will come from both sides of the aisle. Look for these six proposals to be on the table when Congress finally sits down to talk turkey.

Jane Bennett Clark
Senior Editor, Kiplinger's Personal Finance
The late Jane Bennett Clark, who passed away in March 2017, covered all facets of retirement and wrote a bimonthly column that took a fresh, sometimes provocative look at ways to approach life after a career. She also oversaw the annual Kiplinger rankings for best values in public and private colleges and universities and spearheaded the annual "Best Cities" feature. Clark graduated from Northwestern University.