Many Americans worry about Social Security and the future. There is much concern that the system will go bankrupt. What, exactly, is meant by this is often unclear, but it seems to generally suggest that Social Security will not be available to pay benefits, either for retirees or the disabled.
This concern is inaccurate and unfounded. While there are trust funds that supply some of the monetary resources necessary to pay benefits, they only supply a portion of the total the Social Security Administration disburses each month. The problem is that in approximately 18 years if Congress does nothing and those funds are exhausted, benefits will need to be cut.
This is a real concern, especially if you were to be disabled at that time. Because disability benefits are modest, the need to cut 20 percent of the benefit would be disastrous for most beneficiaries. A similar concern exists for many retirees.
There are many ways Congress could respond to this crises. One discussion list 15 options. Some are unpleasant; such as "doing nothing," which Congress has been quite adept at doing.
Others are equally poor choices, such as waiting until 2034 and then executing a bunch of drastic changes, including raising the payroll tax, applying the payroll tax to all levels of income, means testing the indexing of benefits, or some other combination of alternatives.
Congress could choose to act now and using a couple of the options together, they could eliminate any need for harsh action in the next two decades or severe cuts to the program. While it is commonplace to state that there is insufficient political will to solve this issue, the real question that should be asked is given the importance of these two programs for millions of Americans, why is there no political will?