The insolvency of Social Security is a can that has been kicked down the road for too long now. There are a lot of partisan issues that Democrats and Republicans can lock horns on, but Social Security is a major commitment made to the senior generations of America that has to be upheld.
Three things are going to have to happen. Various interest groups will howl and moan, but in the end, the realities of the situation will demand a compromise that will include these adjustments:
1) Benefits must be reduced. Accountants can fuss over the details, but I would guess that something like a 10% to 20% reduction in benefits will be necessary.
2) Revenues must be enhanced. Again, the devil is in the details, but a raise in Social Security withholding in the vicinity of another 1% might be in order.
3) Eligibility age must be raised. Full benefits used to be available at age 65. That threshold has been raised to age 66 for some of us, and up to 67 for the youngest of us now. The full eligibility age may have to be raised again to 69 or 70. We are living longer now. That's just a plain hard fact.
From the standpoint of someone preparing to retire, none of these changes are welcome. Unfortunately, they are necessary.
We can behave like adults, look at the situation realistically, and deal with it...or, we can stick our heads in the sand while the whole unsustainable system crashes down around us.
We Americans can be pretty partisan and bellicose when we dig our heels in and decide to fight for our convictions.
But above all, I believe we are a pragmatic and practical bunch. It is in the interest of us all to save the Social Security system and put it on a sustainable financial path.
Just like death and taxes, old age will come to us all. We all share a common self-interest in compromising on a practical solution to fix Social Security.
