Americans are facing an unprecedented retirement security crisis. Right now, we have a $7.7 trillion retirement savings gap – meaning that for the first time in our country’s history, current and future retirees are preparing for a lower standard of living in retirement than their parents. And, with 38.3 million working age households with zero retirement savings, our elected officials must look for ways to expand the only guaranteed source of retirement security: Social Security. As the New York Times says:
Nearly all Republican candidates have called for cuts to Social Security benefits.
Jeb Bush, Chris Christie, Ted Cruz and Marco Rubio all favor cutting benefits by delaying the age for full benefits; the retirement age is already set to rise to 67 for people born in 1960 or later. They say a higher retirement age is needed to keep up with longer lives. But data show that life expectancy is growing faster among the wealthy than among the poor, and poor women are seeing life expectancy decline. So raising the retirement age across the board would hit lower-income workers the hardest.
Mr. Bush, Mr. Christie and Mr. Cruz have also endorsed reducing future cost-of-living adjustments in Social Security, even though there is no compelling evidence that the current adjustment is too high.
Mr. Bush and Mr. Cruz have said that Social Security payroll taxes should be diverted into new private accounts for employees, a reprise of President George W. Bush’s failed privatization attempt in 2005. Private accounts do not enhance retirement security. They divert money that would otherwise finance Social Security to Wall Street and shift the risk from government to individuals.
Donald Trump opposes benefit cuts, including a higher retirement age, but he has offered no meaningful ideas for reform.
The Democratic candidates have played defense and offense. They have opposed benefit cuts and privatization. They have proposed increasing the system’s revenues by raising the ceiling on the amount of wages, currently $118,500, that are subject to payroll taxes. That reform is overdue. If the wage ceiling had kept pace with the income gains of high earners over the decades, it would be about $250,000 today.