Because the presidential and congressional elections are on everyone’s mind, more than a few people have sent me emails saying something like this: “I’m afraid that this upcoming election will lead to dramatic changes to Social Security. So even though I didn’t want to file for Social Security for a few more years, I’m going to do it now so that I am grandfathered into the current system and no president or Congress will pull the rug out from under me!” And then they ask me if I think that’s a good idea.
And here is my answer: NEVER make a decision about when to start your Social Security benefits based on politics. Instead, make that decision based on your financial situation, your anticipated longevity, your marital status, and other personal considerations discussed often in this column.
Why not politics? Well, consider this. For 50 years now, people have been making the same point to me. In other words, as far back as the 1970s and 1980s, people were telling me: “I’m afraid so and so (insert your political villain here) will be elected and he will ruin Social Security as we know it.” And of course, that never happened. Social Security keeps chugging along no matter who is sitting in the Oval Office.
To be sure, Social Security has been reformed over the years, and changes have been made to the laws affecting a person’s eligibility for benefits. But if those changes were major, they were almost always phased in over a long time.
Case in point: In 1983, Congress raised the retirement age from 65 to 67. But they did not do so overnight. They phased in the age increase over a period of more than four decades. In fact, it won’t be until 2027 that people born in 1960 will finally reach their full retirement age of 67.
If somewhere in the near future Congress raises the retirement age again (and I will bet my next 10 Social Security checks that will happen), it won’t be people currently in their 60s who will be affected by the change. Rather, it will be our children, and more likely our grandchildren, who will have to wait until a greater age before they can retire with full Social Security benefits.
Many readers have also complained to me that with 10,000 baby boomers retiring every single day, the Social Security system has been heading towards a financial cliff, yet nobody seems to be doing anything about it.
Well, there is plenty of blame to go around. Liberals and Democrats deserve their share of the blame, because so often they tend to put their heads in the sand and say: “What Social Security problem?” They run on a platform that essentially says, “I won’t let those nasty Republicans mess around with your Social Security benefits!”
Some conservatives and Republicans deserve praise for at least being willing to discuss Social Security reform. But then they also deserve their share of the blame because they frequently propose outlandish and totally unworkable solutions to the problem—such as “privatizing” the system or eliminating the taxation of Social Security benefits, which would drain $48 billion annually from an already underfunded program.
You may remember this line from Shakespeare’s “Julius Caesar” when Cassius is trying to convince Brutus that Caesar was not chosen by the gods to rule Rome, but rather by the actions of citizens. Cassius says: “The fault, dear Brutus, is not in our stars, but in ourselves.”
If I were the great bard today and I were writing a play about the lack of any progress on the Social Security reform front, I would say, “The fault, dear reader, is not in our politicians, but in ourselves.” In my humble opinion, the public deserves their share of the blame because they say they want reform, but they tend to vote otherwise. For example, if I ran for Congress on a platform of increasing the Social Security retirement age to 68; slightly reducing future cost-of-living increases; and raising the Social Security payroll tax by just a quarter of 1 percent (three very viable solutions to Social Security’s long-range fiscal problems), my opponent would run attack ads claiming that “If you vote for Tom Margenau, he’s going to increase your taxes and cut your grandma’s Social Security checks at the same time!” And guess what? Gullible people would fall for that argument, and I would lose the election in a landslide.
Not that long ago, as part of the ongoing budget negotiations between then-President Barack Obama and the Republican leadership in the House of Representatives, the president bucked the pressure he felt from many members of his own party and proposed a reduction in future cost-of-living increases for Social Security recipients as one way to trim government expenses.
You'd think that Republicans would have greeted that proposal with open arms. But what happened? Many of them immediately took to the airwaves and their Twitter accounts to blast the president for “trying to balance the budget on the backs of our poor, deserving senior citizens.” And that was the same thing Democrats said when the president proposed COLA reforms in the first place.
Do you see why Social Security reform can be so maddening and frustrating? Do you see why there is plenty of blame to go around for the lack of any meaningful changes? Do you see why Democrats should be ashamed of themselves? Do you see why Republicans should be ashamed of themselves? Do you see why the people and voters should be ashamed of themselves?
My guess is that everyone says they want reform, but what they mean is they want reforms that impact the other guy. They don’t want their Social Security checks reduced or their grandma’s benefits cut, but they wouldn’t mind if that other less deserving guy’s benefits are reduced. And they don’t want their Social Security taxes raised or their children’s taxes raised, but they wouldn’t mind if that other guy’s payroll taxes are raised.
So what to do? Here is my suggestion. Go to Amazon.com and buy my book, “Social Security—Simple and Smart.” There is a chapter in that book that explains Social Security financing and offers very workable and realistic proposals for reform. And the next time a candidate runs on a platform including one or more of those reforms, give him or her your vote.
