Americans Willing to Pay More to Get More from Social Security

By: Matt Greenwald

Finally, it appears there’s something that almost everybody in America’s body politic agrees about – the value of the Social Security System. Old or young, rich or poor, Republican or Democrat, there’s widespread agreement that Social Security is a very good thing – and that it’s worth paying higher taxes to improve benefits and make it even better.

A new multigenerational survey conducted by independent research firm Greenwald & Associates on behalf of The National Academy of Social Insurance (NASI) examined public support (or lack thereof) for the kinds of changes that will be necessary to ensure the system’s financial integrity beyond 2033. The program has sufficient funds to pay full benefits until then. But after that, without raising revenues and/or reducing benefits, incoming revenue from payroll taxes and taxation of benefits would cover only about 75 percent of scheduled benefits.

Today’s policymakers are faced with the challenge of choosing among options to increase Social Security’s revenues, improve benefit adequacy or reduce future benefits. To better understand Americans’ preferences regarding those options – and what kinds of trade-offs they are willing to make to keep the retirement system solvent– NASI commissioned a survey of 2,013 working and retired Americans ages 21 and older in June 2014. The survey was conducted online and included an innovative application of trade-off analysis.

Key findings of the study, entitled Americans Make Hard Choices on Social Security: A Survey with Trade-Off Analysis, show that Americans value Social Security and are willing to pay for it:

  • Americans don’t mind paying for Social Security because they value it for themselves (80 percent), for their families (78 percent) and for the security and stability it provides to millions of retired Americans, disabled individuals and children and widowed spouses of deceased workers (84 percent).
  • 84 percent believe current Social Security benefits do not provide enough income for retirees, and 75 percent believe we should consider raising future benefits to provide a more secure retirement for working Americans.
  • 82 percent agree it’s critical to preserve Social Security for future generations even if it means increasing Social Security taxes. And 87 percent favor increasing taxes paid by wealthier Americans.

 The survey respondents were presented with a range of potential policy changes to accomplish those goals. The study’s trade-off analysis shows that the great majority of Americans – 71 percent – support a package of changes that would eliminate Social Security’s financing gap (and actually produce a small surplus), increase the system’s revenues, and pay for benefit improvements.

 The package they preferred would:

  • Gradually, over 10 years, eliminate the cap on earnings that are taxed for Social Security – meaning that the five percent of workers who earn more than the cap ($117,700 in 2014) would pay into Social Security throughout the year, as other workers do.
  • Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2 percent of earnings to 7.2 percent. A worker earning $50,000 a year would pay about 50 cents a week more each year.
  • Raise Social Security’s basic minimum benefit – so that a worker who pays into the system for 30 years can retire at 62 or later and not live in poverty.
  • Increase Social Security’s cost-of-living adjustment (COLA) to more accurately reflect the higher level of inflation experienced by many older people, primarily because their out-of-pocket medical costs rise faster than average costs.

This package trumps the status quo by large majorities of seniors in the so-called Silent Generation, born before 1946 (76 percent); Baby Boomers, born from 1946 to 1964 (71 percent); Generation X, born from 1965 t0 1979 (73 percent) and Generation Y, born in 1980 and after (67 percent).

The package was endorsed by large majorities across political parties and income levels. Fully 68 percent of Republicans, 74 percent of Democrats and 73 percent of Independents favor the package, as do 69 percent of those with incomes under $35,000 and 71 percent of study participants in income groups from $75,000 and above.

The individual findings of Americans Make Hard Choices on Social Security: A Survey with Trade-Off Analysis should be of immense value to policymakers as they grapple with the tough decisions for preserving Social Security that lie ahead. At a time when the nation seems deeply divided about the appropriate size and role of government, Americans across political, generational and income lines not only strongly support Social Security, but also support specific options to strengthen the program for the future.

http://www.nasi.org/learn/social-security/americansagree

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