If you turn 62 in 2027, one of these ideas starts with you. Raising the full retirement age to 69 would begin with your birth year. On Friday, Oct. 23, the Journal's Richard Rubin and Kara Dapena scored five Social Security fixes. Each got two grades, for how much of the 75-year gap it closes and how many years it adds before the trust funds run dry.
First, the gap. Benefits already cost more than payroll taxes bring in. For 2033 the forecast is $2.4 trillion going out and $2 trillion coming in. By 2034 the combined retirement and disability trust funds run dry. The retirement fund alone goes first, in 2032 by the Journal's editorial page, the date we used on Oct. 9. Add up 75 years of yearly shortfalls and you get $29.3 trillion in today's dollars. With no fix, cuts of more than 20% loom. Congress isn't expected to allow that, and it hasn't picked a fix.
The five, scored
One, raise the full retirement age to 69 from nearly 67, starting with people who are 62 in 2027. The top age for delayed credits, the bonus for waiting, would move to 72 from 70. It closes 15% of the gap and delays the date by zero years. Two, end the payroll-tax cap, now $184,500. Pay above it would owe the full 12.4% tax, 6.2% each from worker and employer, with no extra benefit. It closes 58% and buys 24 years, to 2058. Three, raise the cap so 90% of wages are taxed, with a small benefit bump for those who pay more. It closes 19% and buys two years, to 2036.
Four, switch the yearly cost-of-living raise in December 2027 to the “chained” consumer-price index, which usually grows more slowly. It closes 15% and buys no time. Five, tie new retirees' starting benefit to inflation instead of wage growth from 2033. It closes 69% and buys no time, and the program would be in surplus by the 2080s. None of the three benefit trims moves the 2034 date, because Congress phases them in to spare people at or near retirement. Only the tax changes move it. The authors expect the final deal to combine several ideas, perhaps with more borrowing. In the Kansas Senate race, Republican Sen. Roger Marshall said in a debate he'd end the cap. His Democratic opponent, Adam Hamilton, said he'd raise it but keep it. We take no side.
Our read
This is Retirement, M10. Every fix lands on someone. The cap changes land on anyone whose own pay tops $184,500, including many business owners. The age, cost-of-living and formula changes land on people retiring in the 2030s and later. If you're 62 in 2027, the age change and the slower raises would reach you. So would a cap change, if you still earn above it. The fifth fix starts with new retirees in 2033. Neither a 20%-plus cut nor an untouched program is a safe thing to plan on.
Here's the check. Log in to your my Social Security account at ssa.gov this week. Write down the three benefit numbers on your statement, at 62, at full retirement age and at 70. Then ask if your plan still works with the full-age number two years later and the top age at 72. If it doesn't, the plan leans too hard on one check. A second income leg, like a pension, a set withdrawal rule or part-time work, can carry the rest. Nobody knows which year the rain comes, so it's worth finding the umbrella now. We'd be glad to run your statement through our file.