Where is Social Security Heading?

There has long been a debate in the government about Social Security and its real merits. Liberals and conservatives are divided on who should pay what amounts, who is rightfully eligible, and even whether or not the program should exist at all.

Conservatives generally argue that people should contribute less to a larger pool of money. It will ultimately benefit others who did not work as much during the course of their careers.

Liberals tend to argue that national systems should protect all their citizens in their retirement. It includes those who didn’t have the opportunity to earn as much while they were working.

This is not a straightforward question, of course, and there are a lot of factors involved. This article will examine the state of Social Security today, the arguments for and against reducing it. We will also elaborate on what efforts are being made to salvage available money before it runs out.

How and When did the Program Begin?

The Social Security Act was created by President Franklin Roosevelt in 1935 as part of his New Deal reforms to provide relief to Americans during the Depression.

By January 1937, taxes were collected for one-time payments to be made during that month. The system started to develop to include regular monthly payments by 1940.

Prior to this, there had been different types of public provisions available for the poor and elderly. They were based upon English models that had been replicated during the early history of the US.

The first systematized pension dispersions came around the time of the Civil War. These were for both for veterans, as well as women who were widowed because their husbands died in the war.

How Does the Program Work?

Social Security is built on a system of “credits” that people contribute to the system through a tax on their income. There is a maximum number of credits that a person can accrue each year. The amount that constitutes a single credit changes from year to year, and in 2023 the amount is $1640.

A person can earn up to four credits within any given year. If someone has a higher salary and manages to earn the $6540 within a shorter period of time, that amount will still constitute the person’s annual allotment.

By the time someone earns 40 credits, that person is considered fully insured. However, if that person earns more and/or works longer, he or she will be eligible for greater benefits upon retirement.

If a person has not worked within the system for 35 years by the age of retirement, he or she will receive a lower monthly benefit as a result.

Payment Options and the Benefits of Delaying Receipt

Payment amounts are based on a person’s average monthly salary during the peak of his or her working years. In other words, the highest earning years in which that person worked within the system. This number is referred to as the average indexed monthly earnings.

Social Security is also available for veterans and people with disabilities that might be younger than 62 but meet specific requirements. This includes the Medicare program, which acts as a federal health insurance program for people 65 and older.

Medical Insurance

The basic provisions of Social Security state that people aged 62 or older who have worked within the system for at least ten years are eligible to receive benefits. If a person waits until the age of 65 to start collecting Social Security, he or she will receive a higher monthly payment. If a person waits until the age of 70, the payments will be higher still.

For example, in 2023, someone who is 67 can receive a maximum of $3627 per month. However, a person who waits until the age of 70 to start receiving benefits will receive $4555 per month. There is an 8% increase per year for people who put off receiving their benefits.

Problems Facing Social Security Today

Many things have changed since the system first started in 1935. Not only has the population expanded, but people are living longer and paying less in taxes than they used to. Therefore, there are concerns that the system is not receiving enough total input to keep it solvent.

Additional complications include an increasingly reduced birth rate level. It means that there are fewer and fewer people of working age who can contribute to the system. In addition, rising income inequality means that fewer people are contributing a share of their taxes.

It should be noted that Social Security does not even come close to covering most people’s retirement needs in any case. In 2022, the average American received approximately 37% of their past earnings through Social Security.

In 1983, the “full” retirement age rose from 65 to 67. It means that people will not get complete benefits until they reach this age.

For this reason, the vast majority of Americans also have additional retirement funds. For example, 51% of Americans also have a 401(k) plan. Other popular plans include Individual Retirement Accounts (IRAs) and Keogh plans.

What is the Government Doing to Address these Problems?

Despite the precautions that many Americans are taking to guard themselves against the potential risks of Social Security’s becoming insolvent, there is still a major debate in Congress about how the system should be managed.

A recent report indicated that Social Security will run out of money if it does not start reducing benefits by the year 2034. In addition to the demographic factors that have been shaping this trend since the beginning, government expenditure during Covid has also contributed to the shrinking fund.

The year of insolvency has been gradually moving backward. Congress is becoming increasingly concerned about how to handle it. Therefore, both Republicans and Democrats understand that the issue needs to be resolved. The question is how to do it.

The Position of Congress

Republicans have repeatedly suggested raising the minimum age to receive Social Security and Medicare benefits again to age 69 for Social Security and 67 for Medicare (the current age to receive Medicare benefits is 65).

An even more serious risk to the program’s continuation could be Republican efforts to end all federal programs that are not explicitly renewed by Congress every five years. This would apply to not only Social Security and Medicare but many other programs, as well.

Democrats, on the other hand, argue that Social Security benefits do not go far enough. Many of them believe that the benefits the program brings have diminished over time and that the buying power of Social Security allotments is only 40% of what it used to be.

Proposals to Target Program Shortcomings

As mentioned above, members of Congress are at odds about how to solve Social Security’s problems. Republican Congressmen have proposed the creation of bipartisan committees to provide recommendations for improving the program.

However, many Democrats are opposed to this idea. They believe the Republicans’ ultimate goal is to cut Social Security and Medicare benefits. However, it would camouflage these cuts under the guise of supposedly “rescuing” them.

In addition to problems with the system overall, there are even more urgent issues facing some of the funds within Social Security and Medicare. Some of these are due to run out as soon as 2026. Therefore, legislators on both sides of the aisle agree that something needs to be done quickly.

Senator Mitt Romney has repeatedly proposed an idea he calls TRUST – Time to Rescue United States Trusts. It aims to target potential shortages in specific trusts and save them before they become insolvent.


The idea has received some support from many Republicans and even some Democrats. Although there is still concern among Democrats that the plan might be an excuse to reduce overall expenditures on the system.

Romney’s proposal would involve the creation of bipartisan committees to come up with proposed legislative changes within 180 days. It will hopefully increase the lifespan of some of the endangered funds.

However, many Democrats fear that Romney’s proposal is just another way to ultimately shut down the system altogether in a thinly-veiled manner.

The Other Proposal

Another proposal that has been put forward by Rep John Larson, a Democrat from Connecticut, is the Social Security 2100 Act. It was formally known as Social Security 2100: A Sacred Trust.

This act hopes to restore Social Security’s solvency into 2100 by means of increasing the Social Security payroll tax on people who make more than $400,000 per year. The current version of Larson’s bill is a revision of a previous version that would have raised taxes for everyone.

Specifically, Larson’s plan hopes to increase 12 specific benefits of the system. Among the benefits would be

  • an overall 2% increase in benefits
  • a Cost of Living Adjustment to compensate for inflationary tendencies
  • increased benefits for people with less money, widows, and other dependents
  • increased benefits for the disabled.

Critics of the Act claim that the benefits gained by the bill’s enactment would only last for five years anyway. At this point the system would again start to become strained.

In addition, they say, the bill does not take into account inflationary tendencies. It would put more people into the $400,000 income bracket than the bill currently intends to include.

Biden’s Recent Proposal

While younger Americans are starting to prepare for a possible future without Social Security, the larger concern for many people is what the implications would be for much older people who have already retired.

For people who currently rely on the program’s benefits and could live a significant period longer, there is a legitimate possibility that their benefits could suddenly start getting cut in old age.

President Biden recently proposed several measures to target these problems. The first component of Biden’s proposal includes a variation of the Social Security 2100 Act. It would involve implementing a payroll tax for people earning more than $400,000 a year but eliminating it for people who make between $162,000 and $400,000.

He is also proposing to adjust the way that Cost of Living Allowances are calculated. This change would not address the issue of solvency overall, but it would shift the balance of funds in favor of those who need them the most.

Another part of Biden’s proposal involves increasing the Primary Insurance Amount for people aged 78 to 82. It would ensure that people will have access to sufficient funds at the point in life when they will likely need them the most.

Finally, Biden hopes to increase the Special Minimum Benefit for lifetime lower-wage workers.

Despite some support for Biden’s ideas, it is generally assumed that they will not be passed. It’s because the proposal will require bipartisan support in Congress, and this is extremely unlikely at any time in the near future.

Future Changes will Depend on the Composition of the Government

Given all of these points, most people agree that any real change in the Social Security system will depend on the political composition of the government in the future.

Whatever this might be, one thing that people generally agree upon is that most people need to triangulate their savings plans in order to be fully secure in their retirement.

This could mean more people investing in 401(k) plans, IRAs, or combinations of different types of investments. Whether or not Social Security will continue to grow as a federal program has yet to be seen.

Scroll to Top