Social Security plays a critical role in many Americans’ lives, providing economic security to millions of retirees, people with disabilities, and families. But it also faces significant challenges. Changes to benefits and program administration could address Social Security’s shortcomings while reinforcing its many strengths.
In 2023, more than 70 million people will receive Social Security benefits and payments, and Social Security will cover about 181 million workers and their families. As an integral part of the social safety net, Social Security offers numerous benefits to its millions of beneficiaries: it insures workers against the loss of earnings because of death, retirement, or disability; helps bolster economic security for disadvantaged groups; and protects beneficiaries from rising costs of living.
Speaking at a recent Urban Institute event, Kilolo Kijakazi, acting commissioner of the Social Security Administration (SSA), called the program “a core source of financial security not only for workers but for their families too.”
But the program’s actuaries estimate that the Social Security trust funds will be depleted by 2034. Historically low staffing levels at both the SSA and state Disability Determination Services offices, which help determine eligibility for Social Security Disability Insurance (DI) benefits, have reduced service levels and created a backlog of more than 1 million initial disability claims. And burdensome application processes dissuade some eligible people from even applying for disability benefits.
Despite these obstacles, three key strategies—proposed by experts at the Urban convening—could help the SSA better serve current and future beneficiaries.
- Expand services that help people access benefits
Research has documented wide-ranging benefits of participating in Social Security programs. Supplemental Security Income (SSI)—which serves older people, nonelderly adults, and children with a disability and limited income and assets—can reduce a young person’s likelihood of becoming involved in the criminal legal system or incarcerated. And participating in SSI or DI can decrease the risk of financial difficulties like bankruptcy.
But burdensome applications, office closures, a lack of internet access for completing applications, the need to obtain medical records, and other barriers often make applying for and receiving SSI and DI benefits difficult.
Keeping field offices open is especially important for preserving access to SSI and DI benefits. One study found that field office closures reduce the number of disability applications submitted by 10 percent overall and by 16 percent in neighborhoods surrounding closed offices. And applications dropped most for those with limited education and earnings. The SSA needs adequate funding for its administrative budget, including for field operations and staffing, to keep field offices open and accessible.
- Address—rather than reinforce—systemic disadvantages
In many ways, Social Security enhances equity, including significantly reducing the racial wealth gap. Before factoring in Social Security, research shows that white households have five to seven times the wealth of Black and Latinx households. But with Social Security, white households’ wealth drops to two to three times that of Black and Latinx households.
But in other ways, Social Security entrenches disparities related to health, labor market opportunities, mortality, race and ethnicity, and more. Without changes to the program, an estimated 53 percent of Black adults and 62 percent of Hispanic early millennials (born between 1980 and 1989) will not receive adequate retirement income, compared with only 33 percent of their white counterparts. In addition to people of color, other marginalized groups projected to have insufficient retirement income include people without a college degree and those who never marry.
Further, without changes to Social Security to address the systemic disadvantages Black people face, Black beneficiaries will receive an estimated 26 percent less in median lifetime benefits than white beneficiaries, a difference of about $140,000 over a lifetime.
Because benefits are based on lifetime earnings, policies that address structural disadvantages in the labor market, such as closing the racial gap in hourly wages, increasing the minimum wage, and expanding apprenticeships, would narrow the racial gap in Social Security benefits.
- Update benefit rules and program administration
Efforts to modernize Social Security and SSI benefits could help address the systemic disadvantages that some Social Security applicants and beneficiaries face and improve outcomes for the diverse groups who participate in Social Security programs.
The Social Security minimum benefit is intended to boost benefits for recipients with low incomes, but the current minimum benefit is so small (PDF) that it hasn’t meaningfully increased benefits for recipients for many years, and it’s projected to no longer increase benefits for new retirees. As a result, some retirees’ incomes fall below the federal poverty level even after a lifetime of work. Adding a robust minimum benefit to the program, as both Democratic and Republican lawmakers have proposed, could lift many older adults out of poverty. But most minimum benefit proposals restrict eligibility to retirees with long work histories. Making workers with shorter work histories, like those with health conditions or caregiving responsibilities, eligible for the minimum benefit could help more workers access it.
Making the Social Security benefit formula more progressive could also help low-wage workers in retirement. With an even more progressive formula, benefits would replace an even larger share of lifetime earnings for people with low earnings than for people with higher earnings.
In addition, bolstering SSI by increasing payments to cover the cost of basic needs, incentivizing work, and updating SSI’s eligibility rules—which haven’t been updated since 1989—to keep pace with inflation would reduce poverty among beneficiaries and could ensure the program better reaches and supports retirees with the greatest needs.
These and other updates to Social Security benefits and program administration could help the program adjust to changing social and economic conditions.
Though the challenges facing Social Security are real, they present an opportunity to make the program more equitable, efficient, and sustainable for current and future beneficiaries.