Trustees of Social Security have recently reported that its costs will exceed its income in 2020. This shortfall will force the program to dip into its nearly $3 trillion trust fund to cover benefits. By 2035 unless the expected deficits are curtailed, its reserves will be depleted.

In essence, Social Security now has an unsustainable long-term outlook. Without changes, recipients will get only about three-quarters of their scheduled benefits in 2035. Short changing our seniors is morally reprehensible.

Social Security consists of two programs, one for retirees and one for people who claim disability benefits. Last year, 52.7 million people received Social Security retirement and survivor benefits, and 10.2 million received disability benefits.

Social Security has three sources of income. The largest source comes from workers and employers who contribute 6.2% each on wages up to $106,800 a year. This raises about 80% of the total. The second source is investment income from Social Security’s reserves, which are held in trust and invested in interest-bearing U.S. treasury bonds. This raises about 15% of total revenue. Finally, Social Security gets about 5% of its revenue from the taxes that beneficiaries pay on their Social Security benefits.

The latest projections suggest the problem could affect not only future retirees, but also current ones. Today’s newest retirees (age 62) will be 78 when the Social Security retiree trust fund runs out.

I agree with Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. She said: “That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable, and it should be cause enough for every policy maker to rally around solutions to restore solvency to those programs.”

The primary causes of Social Security’s problems are (1) a wave of retiring baby boomers (2) lower birthrates over the past few decades held back employment growth and economic output and (3) increased life expectancy.

When Social Security was passed in 1935, life expectancy was 61.7 years. By 2017 US life expectancy improved to 78.7 years.

Social Security and Medicare account for 45% of federal spending, excluding interest payments on the national debt. They have contributed to our federal deficit that will exceed $1 trillion a year starting in 2020.

The late Senator Daniel Patrick Moynihan, D-NY, highlighted the issues involved in fixing Social Security. He quipped, “Fixing Social Security is easy; it is just difficult.” Specifically, we need to take similar steps to those taken in 1983 when Social Security began running deficits. On a bipartisan basis, the government delayed cost-of-living adjustments and tax benefits, increased the full eligibility age, and raised payroll-tax collections.

To retire well, one needs to receive about 75% of the income earned when fully employed.

Americans have traditionally relied on the “three-legged stool” of Social Security, personal savings, and employer pensions to have sufficient income for retirement. Sadly, saving rates have dropped, employer pension plans have rapidly declined and the Social Security trust fund needs remediation.

Social Security must be fixed because it is the bedrock for retirees. Almost two-thirds of Americans rely on Social Security as their major income source. One-third of Americans rely on Social Security for 90% of their retirement income. Social Security benefits lift 20 million people out of poverty annually.

Pensions rank a distant second with 35% of seniors relying on them. The equity in one’s home accounts for about 27%. Interestingly enough, part-time work represents only 3% of the income for retirees

We need to take several steps to fix Social Security: (1) we need to raise the payroll tax rate from 12.4 percent to 15.2 percent; (2) moderate benefit growth; (3) adjust eligibility ages; (4) put more emphasis on “merit-based” immigration.

Originally published in the Sarasota Herald-Tribune