Trump may let workers take Social Security benefits early in exchange for reduced payments later. Retirement advocate calls it ‘harebrained idea’

Social Security advocates fear this could be the beginning of efforts to curtail the program. Currently, about 45 million retired workers depend on Social Security, with average monthly benefits totaling $1,503.

In a statement, Richard Fiesta, executive director of the Alliance for Retired Americans, slammed the proposal.

“Asking working Americans to give up even one dime of their future Social Security benefits to survive today’s economic crisis is a harebrained idea that would hurt families for decades to come,” Fiesta said.

This isn’t the first time the idea of borrowing against Social Security benefits has been proposed, said Richard Johnson, director of the program on retirement policy at the Urban Institute, a non-partisan think tank. One proposal would have allowed people to borrow against their future benefits in order to obtain paid parental leave.

But those ideas don’t coincide with the fundamental reason Social Security was created in the first place — to provide protection against disability and financial security in old age, Johnson said.

“These proposals kind of fundamentally change the way we think about Social Security,” Johnson said.

Joe Elsasser, president of Covisum, a Social Security software company, said he is skeptical of the idea.

“I am not a fan, primarily because I think it is the most vulnerable people that would be impacted,” Elsasser said.

That would include those who need Social Security the most for longevity protection and old age insurance, he said.

And while such a plan could be structured so it was actuarially fair, and therefore not hurt Social Security’s funding, it could still be harmful to Americans’ bottom lines.

“People are always surprised at how much it costs in 40 years’ down the road’s money to get $5,000 today,” Elsasser said. 

The White House declined to comment.

Article source: https://www.cnbc.com/2020/05/11/trump-may-let-workers-take-social-security-early-for-reduced-payments-later.html