Increasing life expectancy does not always go hand in hand with a corresponding increase in healthy life expectancy. Although countries are moving towards universal health coverage, health costs continue to rise and increase adult poverty rates. In such a Volatile, Uncertain, Complex, and Ambiguous (VUCA) world, social security benefits form individuals’ bedrock or safety net. 

About 67 million people, or about 1 in every 5 U.S. residents, collected Social Security benefits in February 2024. While older adults make up about 4 in 5 beneficiaries, the other one-fifth of beneficiaries received Social Security Disability Insurance (SSDI) or were young survivors of deceased workers.

Older Americans are a solid voting bloc in presidential elections, and savvy politicians know those votes can influence the outcome of a competitive race. According to the U.S. Census Bureau, people 65 and older made up 25.7% of the voting population in the 2020 presidential election. Meanwhile, people ages 18–29 made up just 16.5% of the voting population. 

This article explores the Social Security System, process, challenges, and future choices and connects them with the policy opinions of Presidential candidates, Harris and Trump. 

Introduction

Social Security is the Old Age, Survivors, and Disability Insurance (OASDI) program in the United States that is run by the Social Security Administration (SSA), a federal agency. It’s best known for retirement benefits but also provides survivor benefits and income for workers who become disabled.

The Social Security system was created on Aug. 14, 1935, when President Franklin D. Roosevelt signed the Social Security Act into law. The first monthly benefits checks became payable on Jan. 1, 1940. Ida M. Fuller, a retired legal secretary in Vermont, was the first person to collect one. Her check was for $22.54

Social Security provides a source of income when you retire or if you cannot work due to a disability. There are four types of Social Security benefits:

• Retirement benefits
• Social Security Disability Insurance (SSDI)
• Supplemental Security Income (SSI)
• Benefits for spouses and other survivors of a family member who has died

Process of Benefits & Payments

Social Security is an insurance program. Workers pay into the program, typically through payroll withholding from their paychecks. Self-employed workers pay Social Security taxes when they file their federal tax returns.

Workers can earn up to four credits each year. One credit is granted up to $6,920 for every $1,730 earned in 2024, or up to four credits achieved.

The money goes into two Social Security trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund for retirees and the Disability Insurance (DI) Trust Fund for disability beneficiaries. These two funds are used to pay benefits to people who are currently eligible for them. The money that’s not spent remains in the trust funds.6

A board of trustees oversees the financial operations of the two Social Security trust funds. Four of the six members are the secretaries of the Departments of Treasury, Labor, and Health and Human Services, and the Commissioner of Social Security. The remaining two members are public representatives appointed by the president and confirmed by the Senate.

Medicare is the federal health insurance program for Americans who are age 65 and older and some people who are receiving Medicare benefits due to disability. It’s also supported through payroll withholding. This money goes into a third trust fund that’s managed by the Centers for Medicare & Medicaid Services (CMS).

The Future of Social Security

Concerns have been raised about the ageing of the U.S. population and the viability of a system in which fewer active workers will support a greater number of retirees as the cost of living continues to rise.

In 2016, the International Social Security Association (ISSA) published a groundbreaking report Ten Global Challenges for Social Security, prepared for World Social Security Forum in Panama. To better understand the relevance of the ten global challenges for ISSA member institutions in the Americas, the ISSA surveyed its members in the region. The ordered presentation in this report of the ten global challenges facing national social security systems in the Americas is derived from institutions’ survey responses.

The survey results rank “population ageing” first, followed by “inequality in health outcomes” then “closing the coverage gap”. The challenges of “the technological transition”, “employment of young workers”, and “inequalities across the life course” are ranked fourth, fifth and sixth respectively. “Higher public expectations” is ranked seventh while “Labour markets and the digital economy”, “new risks, shocks and extreme events”, and “Protection of migrant workers” are ranked eighth, ninth and tenth, respectively.

Challenges for Social security

In its 2024 report, the Social Security Board of Trustees estimated that reserves in the retirement fund (OASI Trust Fund) will become depleted in 2033. This was unchanged from the previous year’s projection. Ongoing tax revenue will be enough to pay only 79% of scheduled benefits after that time.

The report also projected that reserves of the Hospital Insurance (HI) Trust Fund that finances Medicare Part A will be depleted in 2036. This is five years later than projected in 2023. The program income will be able to cover 89% of scheduled benefits after 2036.

Each year, the Social Security Trustees publish projections of the program’s finances revenues from payroll and other taxes and interest on the trust funds versus benefits expected to be paid over a 75-year horizon. These projections account for expected changes in the economy as well as demographics. An often-cited summary statistic is the actuarial balance—the increase in revenues or cuts in benefits as a per cent of payroll that, if implemented immediately, would be sufficient to achieve solvency over a 75-year horizon.  Solvency is defined as ending the period with assets in the trust fund equal to one year’s expenditures.

As the figure suggests, comparing the 75-year actuarial deficits now versus those projected in 1982 shows how much larger the challenge is today: To put the program on stable financial footing today would require an immediate increase in revenues or a cut in benefits (or a combination of the two) equal to 3.61% of payroll; in 1983, the actuarial balance under the intermediate projections was 1.82% of payroll, meaning that the required adjustments to revenues and benefits are twice as large today.

After the trust fund runs dry, Social Security will receive income from payroll taxes sufficient to cover only about 80% of benefits. How the Social Security system will address the shortfall is unclear: Social Security is legally required to pay benefits and prohibited from using any revenues other than those dedicated to the program.

Congress will have to find ways to fill the gap if these predictions hold. This might mean higher taxes on workers, lower benefits, higher age requirements for retirees, or some combination of these elements.

The main options fall into three buckets: (a) reduce Social Security benefits; (b) raise Social Security revenues, either by increasing payroll tax revenues or by raising other taxes and dedicating the proceeds to the Social Security system; or (c) allow general revenues to be used—i.e. deficit financing. In addition, policies that affect the economy’s growth—by increasing immigration, raising productivity, or increasing labour force participation, and policies that make Social Security coverage universal (some employees, including certain state and local government workers, are currently not covered) could also help. 

Acting now to address Social Security’s financial woes would reduce the impacts of changes on beneficiaries. Acting now would allow changes to be gradually phased in. It would also give Americans more time to plan for any changes affecting their retirement security. Comprehensive reform proposals from policymakers often include options that could address Social Security’s financial challenges as well as other options that pursue nonfinancial goals. 

Presidential Elections & Social Security Policies

For older voters in particular, Social Security and Medicare are important topics heading into November. 

Social Security is treated separately from the rest of the federal budget for accounting purposes since it’s a mandatory program.

Harris noted that she’d strengthen Social Security “for the long haul by making millionaires and billionaires pay their fair share in taxes.” She’s likely referring to extending the Social Security payroll tax to higher incomes. Currently, these payroll taxes aren’t applied to wages above $168,600 in 2024. 

Biden’s promises to raise taxes on the wealthy haven’t come to fruition. Similarly, he didn’t implement significant changes to Social Security during his presidency. 

Trump has taken a more ambiguous stance on Social Security. During his presidency and recent campaign, he said he would protect Social Security benefits. However, he hasn’t offered details on how he would ensure the program’s long-term solvency without cutting benefits or raising taxes.

Trump’s approach often hinges on the belief that a stronger economy would naturally bolster Social Security. He argues that economic growth and job creation would boost payroll tax revenues, thereby supporting the program.

Earlier in his career, Trump referred to Social Security as a “Ponzi scheme” and advocated for its privatization. However, he abandoned this stance during his first presidential campaign, along with his earlier support for raising the retirement age to 70. Currently, the retirement age for individuals born in 1960 or later is 67.

With some clarity and unclarity from the future Presidents, the future of social security benefits in the USA needs to find its path towards covering the majority of the population, adjusting its cost of living.

Members of Congress from both sides of the aisle have proposed reforms to Social Security over the last decade, from lowering (or raising) the retirement age to tweaking how the program is funded. Despite numerous bills introduced in the House and Senate, none of the measures have been signed into law.

While a president does not have legislative power, he has a lot of influence to introduce and push for large-scale changes. Hence now it would be worth witnessing when funds are about to dry-up what would be the stance of the future POTUS.