Nudging Congress toward Social Security reform

When leaders refuse to lead, it’s time for the people to step in. That, essentially, is the mission of Funding Our Future, an alliance of organizations dedicated to making a secure retirement possible for all Americans. I was honored to serve as a moderator during the coalition’s first public educational session on Capitol Hill recently.

As Americans celebrate the Labor Day holiday, it seems an appropriate time to reflect on the promise of the golden years of retirement that are supposed to follow a lifetime of hard work. Retirement remains an uncertain prospect for too many Americans.

Over 40 million private-sector workers lack access to workplace retirement plans. Millions more face the risk of outliving their savings. And Social Security, the bedrock of retirement income for most American retirees, faces the depletion of its trust fund in about 15 years if Congress fails to act.

A familiar face — Ric Edelman, executive chairman and founder of Edelman Financial Services — is leading the charge along with the Bipartisan Policy Center, a nonprofit Washington, D.C.-based think tank that works to address key challenges facing the nation. The depletion of the Social Security trust fund by 2034 or sooner is one of America’s biggest issues.

“The real challenge here is not coming up with a solution to Social Security — it’s really not that complicated,” said Mr. Edelman, whose firm manages more than $21 billion in assets for clients nationwide. “The issue is to get the political will on Capitol Hill to initiate and implement the solution necessary to save Social Security to improve retirement security for all Americans.”

Mr. Edelman and Jason Grumet, president of the Bipartisan Policy Center, have a simple message for the public: Contact your senators and congressional representatives and give them permission to talk about Social Security reform without fear of retribution. They agreed that it was astounding that no major presidential candidate from either party seriously discussed Social Security reform during the 2016 campaign.

“Every member knows if you raise taxes or lower Social Security benefits, you get thrown out of office,” Mr. Edelman said during one of his recent nationally broadcast radio programs on which Mr. Grumet was a guest.

“Members of Congress don’t have the political courage to talk about the modest changes that are needed to fix Social Security,” Mr. Grumet said. “It truly is the third rail of politics.”

But it doesn’t have to be that way. The key is to start the conversation now. Possible solutions include raising the payroll taxes that fund Social Security benefits, raising the full retirement age above 67, which already applies to people born in 1960 or later, or adjusting the inflation formula used to help retirees and other Social Security beneficiaries maintain their buying power.

None of the proposed changes are popular. But avoiding difficult conversations now will only lead to more drastic measures later. As a rule, Congress tries to avoid benefit changes to current or near retirees. But if lawmakers fail to act before Social Security’s surplus trust fund runs dry around 2034, it would result in an across-the-board benefit cut of about 23% for all beneficiaries, pushing millions of American retirees into poverty, or require massive payroll tax hikes on working adults, many of whom are saddled with crushing student loan debts.

This is not just an old folks’ issue. Millennials are on the cusp of surpassing baby boomers as the nation’s largest living adult generation, according to the Pew Research Center, making them the largest future voting bloc in the country.

The nation’s fractured retirement system of Social Security, employer-sponsored retirement plans and personal savings was designed for a 20th century economy in which a worker was likely to remain with a single employer throughout his or her career. Today’s 21st century reality includes increased life expectancies that stretch dependency on benefits for decades longer than originally envisioned and dependance on payroll taxes from workers who often bounce from job to job, seldom with sufficient tenure to accumulate adequate retirement savings of their own.

More than 30 organizations, including some of the biggest names in financial services, have joined the Funding Our Future coalition, including the Charles Schwab Foundation, TD Ameritrade, Fidelity, MetLife, Orion, Prudential Financial and USAA. Some of the other retirement community partners include the American College of Financial Services, the Center for Retirement Research at Boston College, the Stanford Center on Longevity, the Women’s Institute for a Secure Retirement, the American Benefits Council, the American Council of Life Insurers and TIAA.

It’s time to start a national conversation about retirement security. Let your congressional representatives know that you’ll be listening. If they won’t speak up, we need to find others who will.