In Part 1 of this series, we reported that Social Security faces financial challenges and is projected to be unable to pay full scheduled benefits starting in 2033.
This brief identifies criteria for policymakers to consider when evaluating potential reforms intended to address these challenges.
Can the reform sustain the program financially over time?
Does the reform address goals related to the adequacy and equity of benefit payments?
Does the reform help the program account for recent economic, societal, and demographic changes?
Can the reform be readily implemented and explained to the public?
What GAO Found
Proposals to reform Social Security often combine several changes to the program in a comprehensive set, and those changes can interact with or offset one another. Four criteria that may help policymakers evaluate proposals for reforming Social Security to address its financial challenges, including the interactions between changes in a proposal, are 1) financing sustainable solvency (how a proposal affects Social Security's finances as well as the national economy and federal budget), 2) considering adequacy and equity (how a proposal addresses the goals of equity and income adequacy), 3) modernizing the program to respond to societal changes (the extent to which a proposal accounts for demographic, economic, and societal changes in recent decades), and 4) implementing and administering proposed changes (how readily a proposal could be implemented, administered, and explained to the public).
Why GAO Did This Study
Social Security is considered the bedrock of the U.S. retirement system, and many retirees rely on Social Security benefits for the majority of their income. Nonetheless, Social Security's Old-Age and Survivors Insurance benefit program faces financial challenges and is projected to be unable to pay full scheduled benefits starting in 2033. At that point, if no action is taken, Social Security revenue is projected to be sufficient to pay retirees just 77 percent of their scheduled benefits.
This is the second in a series of reports that outline (1) Social Security's financial challenges, (2) criteria for evaluating proposals for reforming Social Security to address its financial challenges, and (3) options for reforming Social Security that have been proposed. This second report focuses on criteria for evaluating proposals for reforming Social Security.
For more information, contact Tranchau (Kris) T. Nguyen at (202) 512-7215 or Nguyentt@gao.gov.