Last month the Board of Trustees for Social Security released their annual report on the program’s finances. Much of the information was the same as in previous years: the Social Security trust fund is projected to be exhausted in 2034. This does not mean that Social Security will be bankrupt. It simply means that the program will only be able to pay out what it brings in, which will not be enough to cover full earned benefits. What is truly distressing is that the nation’s political leaders have known for years about this looming problem, but have failed to act.
While Social Security forms the foundation of retirement security in the United States, not all workers participate in it. Just over a quarter of all public employees do not participate in Social Security. For them, their public pension benefits will constitute the main part of their retirement. Nevertheless, Social Security is the key to retirement for most American workers, including many public employees.
The lack of political will to address the funding challenges for Social Security reflects a larger political ignorance regarding retirement security. The United States is facing a retirement security crisis as more and more working families face the prospect of falling behind their standard of living in retirement. The decline of pensions in the private sector and the rise of 401(k)s and other defined contribution plans have contributed greatly to this crisis. Moreover, at any given time, roughly half of all working Americans do not have a retirement savings plan through their employer, which means these workers are probably saving nothing for retirement. Studies have shown that having access to a plan greatly increases the likelihood of participation.
In addition to the inaction regarding Social Security, politicians continue to needlessly attack public pensions. Earlier this year, Republican legislators in Kentucky rammed through a pension-gutting bill in eight hours. This bill would force all future teachers in the state to participate in a risky and inadequate cash balance hybrid plan. Kentucky teachers do not participate in Social Security, so they are particularly vulnerable to changes to their pension plan.
The U.S. Government Accountability Office called for a national commission on retirement in a major report released in October 2017. With continued inaction regarding Social Security, ongoing attacks against public pensions, and a severe lack of savings among many working families, it is clear that our political leaders must step up and take action.