Social Security turns 89 years old this week. That’s nearly nine decades of providing baseline financial security to America’s retirees and their families – and since 1956, to people with disabilities. Today, 67 million people — or 1 in 5 U.S. residents — receive Social Security benefits. And in all these years, Social Security has never missed a payment.
When President Franklin D. Roosevelt signed Social Security into law on Aug. 14, 1935, about half of the nation’s seniors lived in poverty. Many were living in actual poor houses. (As of 2021, only 8 percent of people over 65 fell beneath the poverty line.) “We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life,” FDR declared. “But we have tried to frame a law which will give some measure of protection to the average citizen and to his family… against poverty-ridden old age.”
That “measure of protection” is modest, but crucial. The average Social Security check for retirees is about $1,900 per month. If you talk to seniors on fixed incomes, as I do when I’m traveling around the country speaking about Social Security, they will tell you that their earned benefits are a financial lifeline. “It’s a sizable chunk of my income,” a beneficiary in Milwaukee told us. “It’s my livelihood,” said a retiree in Richmond. Another senior put it simply: “Thank God for Social Security.”
Social Security not only provides retirement benefits; it serves as insurance for eligible workers and their families. In fact, the average 27-year-old worker with a family already has the equivalent of some $2 million in life and disability insurance from Social Security. This simple truth betrays critics who say that the program somehow is unfair to younger Americans paying into it. In fact, Social Security truly is intergenerational. It is there for workers today – and when they retire.
Social Security’s impact goes beyond workers and retirees. The program provides economic stimulus for the entire nation. Thanks to the “multiplier effect,” every dollar of Social Security benefits produces $2 in economic stimulus. That adds up to more than $1.6 trillion in stimulus as benefits are spent and generate economic activity in every state.
The program has its challenges. The Social Security Trustees project that reserves in the combined retirement and disability trust fund will become depleted by 2035 if Congress doesn’t take pre-emptive action. Contrary to popular belief, this is not because of the increasing ratio of retirees collecting benefits to workers paying into the program. The lawmakers behind the 1983 Social Security reforms had already anticipated that, which is why they increased revenue and raised the retirement age to 67 for anyone born in 1960 or later.
The primary reason for the current projected shortfall is growing income inequality. The 1983 reformers did not foresee the widening gap between higher earners and everyone else who contributes to Social Security through payroll taxes. Those payroll taxes are capped at a certain level of income, also known as the “tax max.” (The current cap is $168,600 in annual wages.)
Back in the early 1980s, the Social Security “tax maximum” captured 90 percent of Americans’ earnings. With the rich getting richer and middle-class income stagnating, that figure has decreased to only 82 percent today. More and more high earners were “maxing out,” depriving the system of much-needed revenue.
The system can be restored to financial health by adjusting the payroll wage cap so that the wealthy begin paying their fair share. We support Rep. John Larson’s (D-Conn.) Social Security 2100 Act, which re-imposes payroll taxes at $400,000 in wages — and for the first time would include some of high-earners’ investment income. (We have endorsed similar legislation from Sens. Bernie Sanders (I-Vt.), and Sheldon Whitehouse (D-R.I.); and Reps. Jan Schakowsky (D-Ill.), and Brendan Boyle (D-Pa.).
Larson’s bill not only would extend the solvency of the trust fund; it would expand benefits across the board and provide especially vulnerable groups of beneficiaries with targeted benefit increases.
Some on Capitol Hill reject any measures to increase revenue, and insist that Social Security must be “reformed” (code for cutting benefits). We reject benefit cuts as unnecessary and harmful to current and future retirees. These include raising the retirement age to 69 or 70, means-testing benefits, adopting a more miserly formula for cost-of-living increases, or privatizing Social Security.
Some proponents of cutting Social Security claim they won’t touch benefits for today’s seniors, but that future generations will have to count on getting less from the program. But our children and grandchildren will rely on Social Security even more than current seniors do, because of the disappearance of employer-provided pensions, mounting student debt and rising income inequality making it harder to save for retirement. Younger workers will need every dollar of their promised retirement benefits, if not more.
This 89th anniversary year for Social Security is also a crucial one for the program, because the future of Social Security hinges, in part, on the results of the 2024 elections. Most politicians claim to support Social Security. We urge voters to look beyond the rhetoric and assess what candidates for federal office truly propose for Social Security.
Those who advocate cutting benefits (by raising the retirement age or by other means), either for today’s retirees or tomorrow’s, do not have seniors’ true interests in mind. Candidates who want to strengthen and expand Social Security are the ones looking out for workers’ financial security — and honoring the legacy of Franklin D. Roosevelt, who said 89 years ago that the Social Security Act was ”a cornerstone in a structure which is being built but is by no means complete.”
Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare. He is former staff director of the U.S. Senate Special Committee on Aging.