Social Security, the bedrock of retirement security for millions of Americans, faces a long-term financial shortfall that needs to be addressed. How to do it in a fair and sustainable way is a matter of debate and values.

The National Academy of Social Insurance, a nonpartisan organization of experts, has recently published three opinion pieces in major newspapers that offer different perspectives and proposals on Social Security and related policies. These pieces also discuss how Social Security might better support older workers, who face challenges in the current system. Another piece highlights Medicare and improvements in long-term services and supports.

Below are the articles.

We welcome your feedback by emailing warnone@nasi.org

How to fix Social Security

It requires an automatic balancing mechanism

By Alicia H. Munnell and William J. Arnone

The national conversation during this election year needs to include a candid assessment of how to shore up our most popular and effective government program, Social Security. The program currently faces a long-term financial shortfall and an action-forcing deadline — the depletion of its trust fund in the early 2030s, which would require an across-the-board cut in benefit checks. Policy makers have known about this problem for decades but have failed to act. Therefore, when the horse-trading finally begins on a package to fix Social Security, one item on the table should be an automatic adjustment feature — policy changes that kick in if needed to prevent this scenario from ever happening again.

The current approach of waiting until the last minute has serious consequences. It means that the eventual changes to revenues or benefits adopted will be more abrupt, with fewer generations participating in the fix, and it undermines Americans’ faith in the program. Younger people in particular often ask, “Will Social Security be there for me?”

Such a last-minute scramble to sustain this critical social insurance program is not new. In fact, the last major amendments to the Social Security Act more than 40 years ago followed the same playbook. While policy makers did come together on a bipartisan compromise, that rescue package was enacted at the eleventh hour, when the program was within months of being unable to pay full benefits.

When policy makers come together to solve the current shortfall, they should also avoid any future crises by planning ahead. Social Security should be a stable and sustainable program that instills confidence in its current and future beneficiaries. The key is to adopt a mechanism that automatically adjusts revenues or benefits if shortfalls emerge due to demographic and economic changes.

Currently, for example, benefit levels are largely dynamic, as they rise to reflect inflation and wage increases. But revenue levels are much less dynamic, which can result in shortfalls. While the wage base on which contributions are made is adjusted each year, the contribution rate itself is fixed at 6.2 percent. Many countries have automatic balancing mechanisms explicitly designed to ensure that their retirement plans are fully financed.

Take Canada as an example. Unlike the US strategy — delay, delay, delay, and then race around feverishly to fix a problem — the Canadians have a much more civilized approach. It is a backstop arrangement that is activated only in the absence of a political agreement. When shortfalls first emerge, Canada’s “Automatic Balancing Mechanism” adjusts revenues and benefits, insulating its program’s financing from legislative inaction.

Mechanically it works as follows. Every three years, Canada’s Chief Actuary estimates the minimum contribution rate required to finance benefits over 75 years. If this required rate exceeds the current rate — and if policy makers cannot agree on a fix — the backstop kicks in. Contribution rates are then automatically increased by 50 percent of the difference between the legislated and the required rate; and current benefit payouts are frozen until the next actuarial report. This automatic approach works because it gives lawmakers a chance to act to improve the long-term sustainability of the system but provides a fallback mechanism if they do not do so on a timely basis.

The United States doesn’t have to adopt the specifics of the Canadian backstop mechanism, but including some automatic adjustment in the face of inaction would improve confidence in the long-term stability of our Social Security program.

It’s worth underscoring that Social Security is more than a financial equation to be solved. It covers all Americans and is the foundation of our retirement and disability income systems. Most important, it is a commitment from generation to generation. A backstop mechanism will ensure that this commitment continues with certainty and stability.

Alicia H. Munnell is director of the Center for Retirement Research at Boston College and William J. Arnone is CEO National Academy of Social Insurance. They are founding board members of the nonpartisan National Academy of Social Insurance.

Investing in Caregivers and Nursing Homes

“Staffing Shortages at Nursing Homes Persist” (front page, March 1) reinforces the urgent need for the U.S. to develop a coherent approach to the long-term care needs of our aging population.

The pandemic underscored problems in nursing homes that had long been apparent. It also highlighted a longstanding bias toward institutional care for low-income people. Medicaid, the largest source of funding for long-term services, is required to pay for nursing home care, but not for home- and community-based services.

A National Academy of Social Insurance report, “Social Insurance During the Pandemic: Successes, Shortcomings and Policy Options for the Future,” examines the devastating impact of Covid-19 on our nation’s nursing home residents and staffs. Residents of color were disproportionately harmed; their mortality rates were significantly higher than those of white residents.

Congress needs to consider reforms to increase nursing home staffing and improve pay and working conditions. Congress might also consider expanding the Medicare-funded graduate medical education programs to include nurse training. This would help subsidize the cost of such training and address the nursing shortage in nursing homes.

As your article notes, many experts believe that our current approach to long-term care is “fundamentally broken.” It is time for a national solution.

William J. Arnone
Washington
The writer is C.E.O. of the National Academy of Social Insurance.

Older workers doing physically demanding work need our help

We read with interest the March 10 Department of Data analysis “Firefighters might have the most demanding job in the country.”

Our colleagues at the National Academy of Social Insurance recently issued a report on older workers in physically demanding positions. We found that more than 10 million American workers age 55 or older work in warehouses or as home health aides, in retail. Many struggle to do this work as they age. Office workers can continue sit-down work despite physical decline because of aging, but not so those who must stoop, lift and stand for hours at a time.

This is a problem that policymakers should consider, especially in light of proposed changes to Social Security programs. The early Social Security benefit is often framed as a choice for claimants. But for workers who are aging out of their careers with few prospects of transitioning to another line of work, taking Social Security before they can maximize their benefits is their only real option.

The article identified firefighting as a physically challenging job; thankfully, most paid firefighters have pensions that recognize that these workers will need to retire well before they reach age 60. Most workers are not so lucky, and struggle to stay afloat until they reach age 62, the earliest they may claim reduced Social Security retirement benefits.

Fortunately, policymakers can help. One option might be a Social Security “bridge benefit” to help this group of workers hold on until their full Social Security retirement age. Everyone deserves to retire with dignity.

William Arnone and Barbara Bovbjerg, Washington

William Arnone is the chief executive officer of the National Academy of Social Insurance.

Barbara Bovbjerg is the chair of the task force on Older Worker’s Retirement Security at the National Academy of Social Insurance.