Social Security benefits are increasing too rapidly. This acceleration in benefit growth is a significant factor in the program’s worsening financial situation.
We’ve all heard about the challenges facing programs due to a changing demographic landscape. The U.S. population is aging and living longer while birth rates are declining. This means fewer new workers contributing taxes to support benefits for the growing number of retirees. This predicament is real, but there’s a solution that doesn’t require cutting existing benefits.
We can slow the growth of benefits.
Before 1972, adjusting Social Security benefits required an act of Congress because they weren’t tied to any economic measure. When inflation occurred, it would erode the purchasing power of benefits until Congress acted. In 1972, the system shifted to using the Consumer Price Index for automatic inflation adjustments. Further changes in 1977 linked initial benefits to wage growth. Today, workers’ initial benefit levels are tied to wage growth, while benefits adjust with price growth.
