by Mark Miller, New York Times, July 15
Jana Panarites was about to make a midlife career shift in 2010 when her father died. At age 50, she had completed a master’s degree in cultural diplomacy at the University of Southern California and was looking for a position in the nonprofit sector. That plan ground to a halt when she moved back to Maryland, where she grew up, to take care of her mother.
“Like a lot of caregivers, I had no idea what I was getting into,” she said. “I wound up spending so much time taking care of her, there was no time to take care of myself, let alone produce an income.”
Ms. Panarites has no regrets about the three years she spent caring for her mother, who now lives in an assisted-living facility in Florida. On the contrary, she said, “it’s one of the most important things I’ve ever done.”
But the detour damaged not just her career prospects but her future retirement security as well. Her annual Social Security income — projected at $18,500 if she files for benefits when she reaches full retirement age in 2026 — will be at least 20 percent less than she could have expected had she not left the work force, according to a rough estimate from the Social Security Administration.
A growing number of legislators and policy makers would like Ms. Panarites and other caregivers to receive some relief as part of a broader effort to expand and modernize Social Security benefits.
Until recently, all the talk in Washington regarding Social Security was about cuts. But a grass-roots progressive coalition began campaigning for expansion nearly three years ago, and it has succeeded in moving the concept to the center of the Democratic Party.
Expansion was a popular theme of Senator Bernie Sanders’s presidential campaign; now Hillary Clinton has moved into the expansion camp, saying she would support higher benefits for caregivers and widows and widowers.
Advocates were also elated recently when President Obama endorsed improving benefits. That was a shift from his earlier support for limited cuts at a time when he was hoping, in vain, to reach a grand fiscal bargain with Republicans in Congress.
“We can’t afford to weaken Social Security,” Mr. Obama said in a speech on June 1. “We should be strengthening Social Security. And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous, and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.”
“Like a lot of caregivers, I had no idea what I was getting into,” said Jana Panarites, with her mother, Helen.
The changing political winds have emboldened those who say that fears that Social Security will go bankrupt are overblown.
“I’m delighted people are arguing for expansion,” says Alicia Munnell, director of the Center for Retirement Research at Boston College. “I’ve always been against cutbacks, so now I’m in the center of the debate.”
More than 20 expansion bills have been floated by lawmakers, with proposals ranging from targeted increases for vulnerable retirees to larger increases in benefits for all retirees. At the same time, many of those pushing for increased benefits support dealing with Social Security’s long-range imbalance by making cuts elsewhere and raising revenue to pay for both expansion and by closing the financing gap.
The combined trust funds for Social Security’s retirement and disability benefits are projected to be depleted in 2034, according to the annual report of the program’s trustees. At that point, Social Security itself would have sufficient revenue from current taxes to pay only 79 percent of promised benefits.
That problem could be avoided if Congress agreed to raise additional revenue, impose benefit cuts or do some combination of the two.
Some targeted expansion recommendations come from centrist camps. For example, a recently issued report on retirement security by the Bipartisan Policy Center called for adjusting Social Security’s progressive benefit structure to deliver higher amounts to lower-income retirees. The changes would increase benefits by $176 a month to the median recipient who files at full retirement age — an increase of 10 percent on a $1,700 benefit.
The policy center called for lifting Social Security’s minimum benefit for very-low-income seniors, and enhancing the program’s survivor benefit. Currently, widows and widowers receive either their own benefit or 100 percent of a deceased spouse’s benefit, whichever is higher; under the B.P.C.’s proposal, survivors would receive their own benefit plus 75 percent of their deceased spouse’s benefit.
At the same time, the center recommended two across-the-board benefit cuts: gradually raising the normal retirement age and adopting a less generous annual cost-of-living adjustment.
“We’re really trying to show solutions that can emerge when you put people with very different ideological perspectives in a room and let them negotiate for two years,” said Shai Akabas, director of fiscal policy at the center.
As for caregivers like Ms. Panarites, some proposals would help bolster their retirement income by giving them extra credit for years devoted to taking care of a parent or child in need. Social Security benefits are determined by a formula based on the average of a worker’s highest 35 years of lifetime earnings.
Ms. Panarites and her mother at the assisted-living facility in West Palm Beach. A growing movement seeks to expand Social Security benefits for caregivers.
Ms. Panarites’s earnings peaked at $75,000 in 2006, before she left a job as a paralegal to pursue her master’s degree. Her income has been negligible since 2008, although she has since started a career as an author and podcaster focused on the issues facing caregivers.
“Your 50s are supposed to be your peak earning years,” said Ms. Panarites, now 56.
Her lost lifetime Social Security benefit could easily top $125,000 if she lives to roughly 89, the expected longevity for a woman who reaches age 65.
“When people decide to leave the work force to do caregiving, they usually think, ‘It will be just a couple years, and I can get by,’ but they don’t think of the implications 20 years later when they want to retire,” said Gail Gibson Hunt, president of the National Alliance for Caregiving.
Meanwhile, progressives who started the expansion movement are thinking bigger.
“The real question is whether you expand Social Security across the board, so middle-class workers get an increase, or you don’t,” said Nancy Altman, co-director of Social Security Works, an advocacy group. “Then, you can argue about how big to make the increase.”
Expansion would mitigate the erosion of benefits put in motion by the last major Social Security overhaul, enacted in 1983, which gradually raises the full retirement age from 65 to 67, effectively reducing, by 25 percent, the amount of preretirement income replaced by benefits.
How would the government pay for Social Security expansion, while also helping close its solvency gap?
The main vehicle would be through changes in the payroll tax on salaries and wages, which now collects 12.4 percent — equally split between employers and employees — up to a cap, currently set at $118,500.
An option would be to raise the tax rate gradually. The Bipartisan Policy Center recommends raising the payroll tax another 1 percentage point, spread over 10 years.
Others favor permitting Social Security to invest a portion of the trust fund in equities. By law, trust fund reserves must be invested in special-issue Treasury bonds that pay very low rates of interest. Some proposals call for allowing investment of 40 percent of reserves in higher-return equities, which could close about one-fifth of the long-term shortfall, according to Stephen C. Goss, chief actuary of the Social Security Administration.
The revenue solutions ultimately will depend on the breadth — and cost — of any expansion.
“Most of the expansion proposals have been modest,” Mr. Goss said. “People understand we have a shortfall to deal with, and across-the-board bumps get expensive.”