If you're currently receiving Social Security checks or will receive them soon, Republican hopeful presidential candidate Nikki Haley doesn't want to cut your benefits. But for younger people, Haley believes cuts are necessary.
At a Myrtle Beach, South Carolina campaign rally held earlier in March, Haley said seniors should receive the Social Security and Medicare benefits they've been promised. But she suggested that benefit reductions should be on the table for people like her children, who are both in their 20s.
Those are the ones we tell the rules have changed — anyone new coming in this system. That's how you do entitlement reform. You let them know, it's not going to be there for you anyway because Social Security goes bankrupt in 10 years, Medicare goes bankrupt in five.
Are Social Security and Medicare really going bankrupt?
Not quite. Haley is correct in that Social Security and Medicare each have a solvency crisis, but the programs aren't exactly going bankrupt. Both entitlement programs are paying benefits at a faster rate than they're bringing them in through payroll taxes. Social Security's shortfall is primarily due to demographic shifts — fewer workers paying in and more retired workers taking out — while rising healthcare costs are largely to blame for Medicare's deficit.
The latest Social Security trustee's report projected that the Old Age and Survivors Insurance Trust Fund, which pays Social Security benefits to retired workers and their survivors, will be depleted by 2034. At that point, Social Security would only be able to pay 77% of the benefits it's promised through payroll taxes.
The Hospital Insurance (HI) Trust Fund, which funds Medicare Part A, is scheduled to burn through its reserves even sooner — by 2028. After that, Medicare would still generate enough income to pay about 90% of benefits.
Various proposals have been floated over the years to shore up funds for both programs. For Social Security, proposals have included eliminating the taxable earnings cap, reducing benefits for high earners, and raising the full retirement age. Potential fixes for Medicare have included reducing benefits, raising tax revenue, crediting savings from prescription-drug reforms to the Medicare trust fund, and reducing provider payments.
What is Haley proposing?
Haley hasn't been too specific about the changes she's proposing for Social Security and Medicare. But the former South Carolina governor made it clear during an interview on Fox News earlier this month that she believes raising the retirement age for younger people is necessary.
“What you would do is, for those in their 20s coming into the system, we would change the retirement age so that it matches life expectancy,” Haley told Fox News host Neil Cavuto.
The current full retirement age is 67 for those born in 1960 or later. Haley didn't offer specifics about what she believes the new retirement age should be.
When Cavuto asked Haley for specifics about what age ranges a new retirement age would apply to, Haley said:
It's the new ones coming in. It's those in their 20s that are coming in. You're coming to them and you're saying, ‘The game has changed.'
In 1983, Congress passed major Social Security reform that President Ronald Reagan signed into law. That legislation gradually increased the full retirement age from 65 to the current 67.
The $21,756 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $21,756 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.
I, as well as, many others paid into this program for over 40 years, therefore it is NOT an entitlement program. Unless, of course you did NOT pay into it, like illegal immigrants.
You believed the government’s lies so now you insist young people continue with the Social Security Ponzi scheme. You were an idiot for 40 years means you were an idiot then and are still an idiot now. Socialism sucks JABrown. Anytime we stop doing something that is stupid – that’s smart. Set the young people FREE!
Too many SS payouts that were never meant to be – only to purchase votes.
Funny how the Welfare system never runs out of money but the Social Security and Medicare system is going broke!
The first group never paid into the system, the second group paid into the system all their working years!
Either pay me all the money I put into the system or make changes so it’s fully funded!
Soon to be Retired!
They are using our tax dollars to prop up Ukraines retirement pensions but to hell with ours.
I desire to become aware of why the half-breed Obama, has not been duly prosecuted
from stealing 6 billion dollars from Social Security, when this worthless 44th
POS was our POTUS for 8 miserable years. In additon, why hasn’t Hillary ROTTEN Clinton
been prosecuted for the missing 6 billions dollars from her account when she was Secretary
of State, under worthless, Black Obama.
Wasn’t Nicky Haley one of the World Economic Forum’s graduates from their Young Global Leaders program? If so I couldn’t trust anything that ties back to Klaus Schwab and his Great Reset Group. We’re in some very dangerous times and have to be careful about our sources of trusted information.
Life was good for politicians when the baby boom came into the workplace and all those billions started pouring into the SS coffers. Need money to help the ‘poor’ and not raise taxes? ‘Borrow’ from SS funds. Need money for this that and the other things to get votes? ‘Borrow’ from the SS fund and don’t worry Mr. and Mrs. politicians, you’ll be dead by the time the baby boomers start collecting from a fund that they depleted. Our American system should not have allowed this to happen but as humans go greed takes over and if borrowing from the SS fund allowed them to stay in office and live the good life while Americans were and still are led to believe they are always looking out for those in need at the expense of those paying the bills. Those now dead started the problem but today’s officials have continued these bad fiscal practices for the same reasons – to keep their government jobs. Well, we must now pay the piper but there is no magic bank to do so and the solution is to stiff our children and grandchildren. Shame on you Washington and shame on the give, give, give me Americans that supported these policies by electing the giveaway officials AKA mostly Democrats!