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Slowing the Growth of Social Security Spending

Three broad approaches for constraining the rise in Social Security benefits have received considerable attention. Under those approaches, policymakers could:



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Reduce the size of the initial payments that new Social Security beneficiaries are scheduled to receive,





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Increase further the age at which workers become eligible for full retirement benefits (which would reduce the initial benefit received at any given age of claiming), or





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Reduce the annual cost-of-living adjustment that beneficiaries receive once they become eligible for benefits.



Several CBO papers have analyzed those and other approaches for restructuring the Social Security program.9 In addition to reducing future Social Security benefits, policymakers could restore long-term actuarial balance to the program by raising Social Security taxes or dedicating more general revenue to it.

If policymakers decide to slow the growth of Social Security benefits, considerations of both fairness and economic efficiency point toward enacting new legislation long before the changes take effect. People generally consider the size of their expected Social Security benefits when deciding how much to save and how long to work. Because those benefits are a major source of income for many people, it will be important to enact any benefit reductions well in advance to give people enough time to respond by adjusting their plans for saving and *retirement.


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