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Thursday, Jun 8, 2023



With Social Security reform drawing ever nearer, you need to give some thought to how it might change your life.

Nothing certain can be said until a program has actually passed. But a few general principles permeate all the plans for change. Here’s the state of play:

1. Social Security won’t be allowed to die or be turned into a purely private program. It’s the most popular government benefit ever, and will be retained. But it will change. The current system of taxes and benefits cannot support all the boomer retirees, and everyone knows it.

The time for fantasy and denial has just about run out. Under current law, the first of the boomers will start drawing early retirement benefits just 10 years from now, when they turn 62. Soon after that, the trickle will turn into a flood.

Before that happens, reforms will have to be put in place. Some sort of agreement is sure to be reached within the next two or three years.

2. The principal trade-off is between benefits and taxes. If you don’t want payroll taxes to rise, Social Security benefits have to shrink. If you want benefits to stay about where they are, payroll taxes have to rise. How those costs should be distributed is the heart of the debate.

3. Retired people generally support higher payroll taxes, to maintain Social Security as they know it now. But that’s easy for them to say. They don’t pay the tax. And whatever happens, their own benefits won’t change.

Their attitude makes me think of Sen. Bob Dole’s classic rhyme: “Don’t tax you, don’t tax me, tax the fellow behind the tree.” In this case, the “fellow behind the tree” is the population that still works.

Current retirees should butt out of this discussion. The boomers and Generation X will shoulder all the benefit reductions and pay any payroll tax increases. They’re the ones who should decide what kind of system they want.

4. Older people do have one significant contribution to make to Social Security reform: the tax many of them pay on their Social Security benefits. Congress won’t increase that tax, so seniors don’t have to worry about paying more. But some senior groups are lobbying to have that tax reduced.

Right now, part of that tax goes into the pool of funds used for Social Security benefits, and another part goes toward Medicare benefits. If seniors pay less, these pools will be a little smaller forcing even larger cuts in America’s old-age safety net.

Considering the huge return that older people have received from Social Security, compared with the payroll taxes they paid, I hope they’ll quit fighting the current tax on benefits. They should think of it as giving something back.

5. Congress will not cut Social Security’s annual cost-of-living raises. None of the serious plans suggest it.

Most economists agree that the Consumer Price Index overstates the rate at which prices are going up. To correct this, the Bureau of Labor Statistics is making technical adjustments. But Social Security recipients will get whatever the CPI is said to be.

6. Boomers and Gen Xers earning average-to-higher incomes will lose the most from Social Security reform. Their payroll taxes probably won’t go up. But the government will change the way their benefits are figured. Dollar-for-dollar, they’ll get relatively less.

For lower-income people, by contrast, future benefits will roughly equal those they’d get today.

7. Boomers will have to work longer than people do now. That’s because the age for receiving early Social Security benefits will rise, perhaps to 65. The age for receiving full retirement benefits may also increase, perhaps to 70.

Even under current law, most boomers won’t get full benefits until 67, up from 65 for current retirees.

Many boomers have often said that they’re going to work until they drop, because they haven’t saved enough. Social Security reformers will take them up on that.

8. Life could go hard with boomers who have to retire early, perhaps because of illness or corporate downsizing. You’d have to wait several extra years before Social Security kicked in.

It’s imperative that boomers and Gen Xers start now to save and invest more money. Join your company’s retirement plan. If you belong already, put more money in it.

Social Security won’t pay as much toward retirement in the future. That means you’re going to have to pay more of it yourself.

Where’s the check?

Collecting child support from an unwilling parent is like trying to catch a fly barehanded. The welfare reform law of 1996 included some tough new provisions, but it can take a long time for the states to put them into action.

Exhibit A is what happened when Congress ordered the states to install better computer systems to keep track of child-support cases and help nail missing parents. That was in 1988. The federal government was covering most of the cost.

Today 10 years and nearly $3 billion later what’s the result? Only 28 states have systems certified by the U.S. government as complying with the law. Another seven say they’re ready for certification.

The remaining 15 states missed the deadline, even though Congress extended it from 1995 to 1997.

About half the custodial parents who are due child support are getting full payment, according to census data. The state offices of child support work with people who aren’t getting what they should. Of these state-assisted cases, only 19 percent receive anything at all.

Of the states without good computer systems, five (plus Washington, D.C.) collect below-average amounts of child support.

Alaska collects money on behalf of just 18 percent of the children on its rolls; California, 17 percent; Michigan, 16 percent; Illinois and Indiana, a dismal 12 percent; and Washington, D.C., a pathetic 10 percent, according to preliminary data for 1996 from the federal Office of Child Support Enforcement (OCSE).

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.

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