(The following is an adaptation from the new book, Social Security Works!)
Expanding Social Security by increasing benefits would be a partial solution to four challenges America faces: the income insufficiency of today’s seniors; the retirement income crisis confronting today’s middle-aged and young workers; insufficient recognition of and public support for the caregiving functions of the family and increased inequality, now hollowing out the middle class.
We propose the Social Security Works All Generations Plan — a comprehensive package of benefit and revenue changes that would widen Social Security’s protections in important ways, pay for the improvements and truly strengthen, rather than cut, our Social Security system. The result: stronger, affordable protection for America’s families and a reduction in income inequality.
(MORE: When to Claim Social Security)
Today's Modest Benefits
Social Security currently provides a strong foundation, but its benefits are modest by virtually any measure. Social Security’s retirement benefits average just $15,571 a year. They do not come close to replacing a large enough percentage of wages to allow workers to maintain their standards of living once wages are gone. Moreover, these already minimal replacement rates will be lower in the future, as the result of already enacted cuts, now being phased in.
Increasing Social Security’s benefits for current and future beneficiaries can be done simply and quickly, with no startup costs, no additional regulation and virtually no additional administrative costs. Moreover, it would boost benefits not just of retired workers but also of disabled workers, their families and the families of deceased workers.
The All Generations Plan proposes an across-the-board 10 percent increase in benefits for everyone who receives Social Security benefits now, or will in the future. Just as Social Security has a maximum family benefit, we limit our plan’s maximum benefit increase to $150 a month.
(MORE: Addressing the Coming Retirement Crisis)
Adjusting the Inflation Index
Our plan also proposes the adoption of a more accurate measure of the cost of living experienced by Social Security beneficiaries — the Consumer Price Index for the Elderly. This change is not really an increase in benefits; it is designed to ensure that benefits do not erode.
The current inflation index undermeasures how inflation eats away at the purchasing power of benefits because it is calculated for workers and the general public. But seniors and people with disabilities spend more on health care — where prices rise faster —and less on clothing, recreation and similar items — where prices tend to rise more slowly — than younger Americans.
Targeted Increases to Alleviate Poverty
The All Generations Plan also calls for targeted benefit increases to alleviate poverty. Low-wage workers, as well as workers who were disadvantaged during their working years disproportionately, people of color, women, and members of the LGBT community — are likely to have disproportionately high rates of poverty in old age.
(MORE: More Americans Entering Poverty As They Age)
Social Security has included a minimum benefit since 1939. Because the minimum originally did not differentiate between high-paid workers who had only a few years of work and low-paid workers with long work histories, Congress in 1972 introduced the so-called special minimum for low-income workers with many years of work. Because the special minimum is only indexed to the rise in prices, not wages, it has not kept pace with the nation’s rising standard of living. Consequently, it covers fewer and fewer workers each year.
It is time to update the special minimum benefit so that when fully implemented, those working for at least 30 years and retiring at their Full Retirement Age will receive a benefit equal to 125 percent of the federal poverty line.
Social Security provides benefits to minor children whose parents have died or become disabled. At one time, those benefits continued until age 22 for those who attended colleges, universities or advanced vocational schools. But at the beginning of the Reagan administration, those benefits were repealed. The All Generations Plan restores student benefits for children of disabled and deceased workers.
Dropping Arbitrary Restrictions
Social Security also recognizes the special hardship faced by people with disabilities who are widowed. While widow(er)s cannot receive survivor benefits until age 60 at the earliest (unless they are caring for dependent children), widow(er)s who are disabled can receive benefits at younger ages, in recognition of their inability to work. But there is an arbitrary age, 50, for the start of these benefits and a requirement not applied to other persons with disabilities about how recent the onset of the disability must be. Moreover, unlike disabled workers, their benefits are reduced substantially, to 71.5 percent of a full benefit, when they are received at age 50. The All Generations Plan proposes to drop these arbitrary restrictions and harsh reductions.
Although it is a clever sound bite to ask why billionaires should get Social Security, there are practical as well as conceptual reasons why everyone should receive the benefits they have earned. Scaling back or eliminating the benefits of millionaires and billionaires would produce relatively minute savings, since there are so few of them and their benefits are low already in relation to their contributions, as a result of Social Security’s progressive benefit formula.
The Right Question to Ask
The last major legislative expansion occurred almost a half century ago, in 1972. It is time to expand it again. Expanding Social Security, where the benefits go largely to low- and middle-class families, and paying for those expansions by requiring the wealthiest among us to pay their fair share, will reduce the nation's growing income inequality. We believe the right question to ask is not can we afford these expansions. Rather, the question we should ask is, how can we afford not to expand Social Security in these ways. The results will be greater economic security for America’s working families and a fairer distribution of the nation’s bounty.