Fixing Social Security

If nothing is done, the Social Security Trust Fund is currently projected to run out in about 2033. At that point, projected benefits will fall by about 20%.

The Boston Globe has an opinion piece about the coming Social Security crisis/crunch. It talks about how Canada deals with the problem. I have a subscription and so don’t know if the link below is paywalled, but here are the nut grafs:

“Mechanically it works as follows. Every three years, Canada’s Chief Actuary estimates the minimum contribution rate required to finance benefits over 75 years. If this required rate exceeds the current rate — and if policy makers cannot agree on a fix — the backstop kicks in. Contribution rates are then automatically increased by 50 percent of the difference between the legislated and the required rate; and current benefit payouts are frozen until the next actuarial report. This automatic approach works because it gives lawmakers a chance to act to improve the long-term sustainability of the system but provides a fallback mechanism if they do not do so on a timely basis.

“The United States doesn’t have to adopt the specifics of the Canadian backstop mechanism, but including some automatic adjustment in the face of inaction would improve confidence in the long-term stability of our Social Security program.”

Is this ideal? No, of course not. It’s just better than “nothing.” And “nothing” is currently what we’re on course for here.

Fixing Social Security