According to Ezra Klein, there are eight facts and three thoughts to consider about our Social Security program. With the recent budget talks and government debates about Social Security reform Americans have felt an increased threat to a program that millions of disabled individuals rely on. It also seems like everyone has an opinion on how to fix Social Security or how to keep the program solvent for our future generations.
According to Klein, Social Security’s shortfall over the next 75 years is equal to about 0.7 percent of GDP.
Social Security has replaced about 40 percent of working-age earnings for the average 65-year-old retiring in 2010. The replacement rate is schedule to fall to 31 percent in the coming years.
Social Security’s replacement rate puts it 26th among 30 Organization for Economic Cooperation and Development nations for workers with average earnings.
Forty five percent of seniors would be under the poverty line if it was not for Social Security. With the help of Social Security benefits, 10 percent of seniors are under the poverty line.
Americans qualify for Social Security benefits at age 62, but if they wait until age 70 their checks dramatically increase.
Raising the retirement age by one year amounts to 6.66 percent cut in benefits.
Americans are living longer: in 1935 a white male age 60 was expected to live to 75. Today a white male age at 60 is expected to live to 80.
Klein says that Social Security’s shortfall is manageable by applying the payroll tax to income over $106,000. He also feels that some elites have a strong preference for working longer while most Americans show a strong preference to retiring as soon as possible.
Klein suggests that Social Security’s reform should be done as part of our retirement-security infrastructure rather than simply as a budgetary problem.