Adjusting Social Security

Social Security has come up in discussions about the federal debt, and there are several proposals to make changes. What are these proposed changes? And are they needed? N.C. State University economist Mike Walden responds.

“Well, first of all, I should point out Social Security right now is not contributing to our debt problem. Social Security has surpluses that actually are helping to fund the national debt. But … the people who study Social Security — in fact, the trustees of the system — say there is going to be a problem with financing Social Security 20 or 30 years down the road.

“So we’re ultimately going to have to address Social Security. And there are two major proposals that people have talked about, most of which — or both of which — would primarily impact younger workers. I don’t know of any proposal that would say, ‘We’re going to change Social Security for people who are now getting benefits.’

“One, of course, is to raise the retirement age. It’s now being raised to 67. Some have proposed 70 — the retirement age for getting full Social Security benefits.

“The second is to change how Social Security payments are adjusted each year for inflation. There is an inflation adjustment in Social Security. It’s actually benchmarked against wages. Some say benchmark it against prices. Prices actually tend over a long period of time to go up slower than wages. So, this would make the increases in Social Security a little less each year.

“These are very, very controversial topics and subjects, but we will eventually have to face a problem in Social Security.”