Americans Are Calling for Policymaker Action on Social Security

As the U.S. election in November gets close, a pair of new reports, from HealthView Services and Transamerica, underscore the urgent need Americans feel for Social Security reform.

The white paper issued Tuesday by HealthView Services, a data and technology firm that provides health cost projections to financial firms and advisers, highlights the potential consequences of failing to address Social Security’s funding shortfall.

If no changes are made, retirees could face a 21% reduction in benefits by the early 2030s, HealthView notes. For a mass-affluent couple 25 years away from retirement, that could result in a $908,000 loss in future Social Security benefits. An average-income couple just 10 years from retirement could see lifetime benefits reduced by $252,000.

But the type of fixes policymakers make will also matter. Whether through higher taxes or reduced benefits, substantial changes are likely to affect retirement planning for generations, according to the authors.

For instance, if policymakers raise the full retirement age to 68 from 67, it could lead to a mass-affluent couple retiring in 25 years losing $325,000 in benefits, while an average-income couple would face a $249,000 reduction.

If other options are taken, such as raising the payroll tax cap or taxing healthcare premiums, these would increase the financial burden on workers.

Meanwhile, lowering the cost-of-living adjustment by 0.5% annually, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, would also lower payments for future retirees. A mass-affluent couple retiring in 25 years could see a $287,000 reduction in lifetime benefits, while an average-income couple 10 years from retirement would lose nearly $100,000.

Another proposal some policymakers have suggested, reducing spousal benefits from 50% to 33%, would have minimal impact on Social Security’s overall funding, but could cost the lower-earning spouse in a mass-affluent couple nearly $250,000 over their lifetime, according to the firm.

“Congress will have to make hard choices that will reduce benefits or increase tax revenue for the program – both of which have a significant cost to future retirees,” said Ron Mastrogiovanni, CEO of HealthView Services, in a statement with the report.   

One proposed change would not affect mass-affluent or average income couples but would matter for high-income earners: eliminating the earnings cap on Social Security contributions for high-income earners. Under this plan, a couple earning $500,000 annually, 25 years from retirement, would pay an additional $252,000 into the system without receiving any extra benefits. According to modeling from the Society of Actuaries, this change could address 70% of Social Security’s funding shortfall, providing a significant boost to the program’s solvency.

The HealthView report draws on actuarial and government data, as well as 530 million medical claims.

In a separate report from the Transamerica Institute released Tuesday, a survey of more than 10,000 U.S. residents reveals that 62% of Americans consider addressing Social Security’s funding shortfalls a top priority for the president and Congress.

Across all demographic groups surveyed—spanning generations, employment status, race and ethnicity, gender, household income, urbanicity, military status, and LGBTQ+ status—there was a shared priority: addressing Social Security’s funding shortfall.

Other key concerns for the general American population include Medicare funding shortfalls (51%), making healthcare more affordable (49%), and ensuring workplace retirement savings options (44%).