AARP Bulletin - July/August 2010

nances than he ever imagined. His view: “Cut Social Security? No!”

Ernestine Bosley, who lives in Ravenswood, W.Va., has just marked her 70th birthday. There wasn’t a lot to celebrate. She spends most of her time taking care of her husband, Walter, who has cancer. The Bosleys rely entirely on Social Security benefits—which total less than $2,000 a month for both.

“You try to live on that, honey,”
Bosley says. “So when I hear talk
about cutting Social Security—
it stinks! And if they cut it in the
future, for people in their 50s to-
day, why, it’ll be just as bad. They
shouldn’t even be talking about
Social Security.”
But they are. Critics have been say-
ing for years that we can’t afford to
maintain, let alone strengthen, the
program because it’s going broke.
Polls show that many young people
especially believe that “Social Se-
curity won’t be there for me.”
So: true or false?

A new report by the U.S. Senate Special Committee on Aging says much the same thing. It lays out options that could close the projected long-term gap—without cutting benefits. For example: ; Lift the cap. Earnings above a specified level, currently $106,800, aren’t currently taxed to support Social Security. The cap inches up year-

Your Money ;

Bud Bickley, 73, Tremont, Pa.

“Social Security is much more important than I thought it would be. I figured I’d find part-time work, get some extra income, but there’s nothing going on around here. I used to work in a factory that made parts for the space shuttle, but all that work went someplace else. Cut Social Security? No!”

to-year based on increases in average wages, but raising it more would have minimal impact on high earners while closing much of the projected gap. ; Raise the payroll tax rate—but very gradually, such as by 1/20th of a percent each year for workers and employers over the course of 20 years. ; Extend Social Security coverage to more workers, including newly hired state and local government employees. This would bring more tax revenue through the door. ; Earmark revenue from the estate tax for Social Security.

; Bolster Social Security’s reserves by diversifying its trust fund beyond government bonds to include higher-yielding commercial investments.

“Contrary to popular belief, the sky is absolutely not falling for Social Security,” says Sen. Herb Kohl, D-Wis., who chairs the Special Committee on Aging. “With modest tweaks, we can ensure solvency and even strengthen benefits for those who count on their monthly check the most.” ;