It's Simple Math: Getting Savings from Social Security Quickly Means Cuts for Current Beneficiaries

The mission of the super-committee (a.k.a. Joint Select Committee on Deficit Reduction) is to come up with a plan for reducing the deficit by $1.2 to $1.5 trillion over the next ten years, and they’ve reportedly put Social Security on the table (even though Social Security is an insurance program with its own financing that hasn’t contributed to the deficit). It shouldn’t take an actuary to figure out that if the super-committee is going to squeeze significant savings out of Social Security over the next ten years, it’s going to have to cut the benefits of people who will be receiving benefits over the next ten years, mostly current beneficiaries and near-retirees, whose benefits politicians of both parties have said they would protect.

But it does take an actuary to determine just how much of the benefits expected to be paid over the next 10 years are expected to go to current beneficiaries and those close to eligibility, and how much would go to people who don’t become eligible until 2019 or later (under age 55 this year). Social Security’s Chief Actuary just provided those estimates.

The Actuary reports that 76 percent of the benefits to be paid over the next ten years will go to current beneficiaries. Another 21 percent will be paid to people who will become eligible before 2019, mostly near-retirees. Less than three percent will go to people who don’t become eligible until 2019 or later.

So if the super-committee wants to use Social Security cuts to meet its ten-year deficit-reduction goal, it has to cut benefits for current beneficiaries and near-retirees. It’s simple math. They may propose making the cut by changing to the chained cpi to calculate the annual cost-of-living adjustment. They might try to pass it off as a technical change. But it’s still a benefit cut, and one that especially hurts women. That’s simple, too.