(Reuters) - Republican presidential candidates on Monday traded barbs over their positions on Social Security but avoided deep discussion of possible solutions to a coming funding crunch in the retirement program.
Here are some important dates and possible choices lawmakers will weigh on Social Security as 77 million older Americans -- Baby Boomers born between 1946 and 1964 -- begin to draw benefits.
For years, Social Security payroll taxes generated huge surpluses that were put into a trust fund that loaned the money to the government to pay for income tax cuts and other programs. Now, spending on Social Security benefits exceeds tax revenues, although the trust fund still earns interest income.
-- After 2014, the deficit between payroll tax revenues and benefit payments is expected to grow rapidly as the number of retirees grows at a substantially faster rate than the number of workers, according to the latest trustees report.
-- After 2022, Social Security will have to tap into its trust fund to pay benefits.
-- In 2036, the trust fund is exhausted and the program will be able to pay only about 75 percent of promised benefits with tax revenues.
-- Benefit payments will rise from about 5 percent of U.S. Gross Domestic Product now to about 6.1 percent in 2035.
SOME CHOICES AHEAD
-- Raise the retirement age. The retirement age for full Social Security benefits is 66 and will rise to 67 for anyone born after 1960. Some lawmakers have suggested raising the retirement age to as high as 70. Anyone retiring before that age would receive Social Security benefits at a reduced level.
-- Increase the amount of income subject to Social Security taxes. Polling shows this as most politically acceptable choice. The amount of income subject to Social Security taxes rises with the rate of inflation and stands now at $106,800.
-- Raise the tax rate. The Social Security payroll tax rate is 12.4 percent, evenly split between employers and workers. Workers' share of the tax was temporarily reduced to 4.2 percent in 2011. Some analysts say raising the rate could discourage hiring.
-- Change the benefit calculation. The initial Social Security benefit is on workers' wages and subsequent increases are determined by consumer price inflation. Because wages historically have risen faster than consumer prices, some analysts suggest linking the initial benefit more closely to consumer prices than wages.
-- Reduce cost-of-living adjustments. Some economists argue the Consumer Price Index used by the government to adjust Social Security benefit payments overstates the actual rate of inflation because people often switch to lower-cost items when faced with price increases.
-- Reduce benefits for wealthier retirees. Benefits are paid regardless of income and some analysts propose reducing or eliminating Social Security for retirees whose assets or income exceed a set level. Critics say that would turn Social Security into a welfare program, eroding public support for what now is the most popular social program offered by the government.
(Reporting by Donna Smith; Editing by Jackie Frank)