Social Security is once again proving its worth during the coronavirus pandemic, continuing to provide steady income to retirees and those with disabilities, says high-profile retirement researcher Alicia H. Munnell in the latest brief from the Center for Retirement Research at Boston College.
That’s why Munnell, director of the CRR, concludes in her brief that, “once this crisis subsides, stabilizing Social Security’s finances should be a high priority to restore confidence in our ability to manage our fiscal policy and to assure working Americans that they will receive the income they need in retirement.”
She goes on to say the long-run deficit can be eliminated only by putting more money into the system or by cutting benefits. “There is no silver bullet.”
Munnell’s brief, “Social Security’s Financial Outlook: The 2020 Update in Perspective,” available in full here, analyzes the latest annual report released last week by the Social Security Board of Trustees on the long-term financial status of the Social Security Trust Funds, which found Social Security’s 75-year deficit increased from 2.78% to 3.21% of payroll, and trust fund depletion remains at the year 2035, after which payroll taxes still cover about three quarters of promised benefits.
“If the COVID-19 economic collapse causes payroll taxes to drop by, say, 20% percent for two years, the depletion date would move up by about two years. Thus, COVID-19 highlights, but does not change, the basic message: As soon as we get the immediate issue of the pandemic off our plate, it would be a good idea to take steps to ensure that people retiring in the mid-2030s and later do not see a 20-25% cut in benefits,” the brief says.
The brief also discusses how the COVID-19 pandemic might affect benefits for new retirees, future cost-of-living adjustments, and overall program finances. Munnell’s analysis says the existing shortfall is manageable, and the pandemic is unlikely to fundamentally alter the long-term financial status of the program.
“The bottom line is that while the deficit is larger, Social Security has once again demonstrated its worth during these tumultuous times, when—in the face of economic collapse—it has continued to provide steady income to retirees and those with disabilities,” Munnell says.
Munnell also calls out the fact that the Board of Trustees is still incomplete, as it is meant to be comprised of six members. Four serve by virtue of their positions with the federal government: Steven T. Mnuchin, Secretary of the Treasury and Managing Trustee; Andrew Saul, Commissioner of Social Security; Alex M. Azar II, Secretary of Health and Human Services; and Eugene Scalia, Secretary of Labor. The two public trustee positions are currently vacant.
“These slots should be filled,” Munnell says in the brief. “Public trustees play an important role in overseeing the program and communicating its status to the public. Their continued absence reflects a failure with the political process, not with the program itself.”
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