Cutting Social Security would set off a hand grenade, politically.
“We could see a new rule for people entering the workforce in five to 10 years, where the definition of full retirement age changes, or the metric of calculating the benefit changes,” Crowell said.
He said he sees no evidence of cutting benefits, and it’s never been done previously.
The current situation may unfold in way similar to the late ’70s, says Jim Blankenship, a certified financial planner at Blankenship Financial Planning in New Berlin, Illinois, when the Social Security system was beginning to show signs of faltering.
The government waited till 1982 to raise the full retirement age and increase taxation, “the year it was projected we’d have to start cutting benefits,” Blankenship said.
Another example, according to Marc Goldwein, senior vice president and senior policy director at the Committee for a Responsible Federal Budget, was delaying the cost-of-living adjustment in 1983. “It meant benefits didn’t fully grow with inflation,” Goldwein said.
Means testing and additional taxation are two methods that could be used to strengthen the system. “But a systematic, across-the-board reduction?” Blankenship said. “I don’t think so.”