For example, if lawmakers were to make no changes until 2035, maintaining a 75-year solvency would require a permanent 3.65 percentage-point increase to the payroll tax rate (for a total of 16.05% that gets split between worker and employer) or a 23% reduction to all benefits starting that year.
Meanwhile, more than 200 lawmakers, all Democrats, have signed onto the Social Security 2100 Act in the House. Introduced by Rep. John Larson, D-Connecticut, the bill would gradually increase the payroll contribution by workers and their employers to 7.4% each by 2043 from the current 6.2% (to 14.8% altogether from 12.4%).
It also would require that earnings above $400,000 be subject to the payroll tax. Right now, earnings above a certain level — $132,900 for 2019 — are not subject to Social Security taxation.
Among other changes, the yearly cost-of-living adjustment for benefits would rely on a different formula to more accurately reflects rising costs for older Americans.
The end result would be extended solvency for the program for 75 years, according to Social Security’s Office of the Chief Actuary.
Altman also said that despite the impending funding woes, retirees should not worry that their benefits will be reduced or eliminated. In fact, she said, they should feel confident about the program.
“The whole reason Social Security is projected out for 75 years is to give people a sense of security,” Altman said. “Social Security has never missed a payment and I don’t believe it ever will.”