“Social security is not going broke,” said Carolyn Colvin, acting commissioner of the Social Security Administration, at a Brookings Retirement Security Project event this week. She was joined by Consumer Financial Protection Bureau Director Richard Cordray to discuss retirement planning and to unveil a new retirement calculator. “Social Security is the only guaranteed monthly income for a majority of older consumers,” Cordray said.

After their keynote addresses, a panel of retirement security experts moderated by Guest Scholar Joshua Gotbaum discussed efforts to improve retirement planning and what knowledge the average American needs to make retirement planning achievable. Ted Gayer, VP and director of Economic Studies at Brookings, introduced the event.

Here are 10 facts about Social Security and retirement planning mentioned during the event. Full video is available below and on the event’s page.

1/3 of U.S. households spend all of their available resources in every pay period

60 million people received Social Security benefits in September 2015

For the average worker, Social Security replaces only about 40 percent of pre-retirement earnings

45 million people are already 65 or order, and 10,000 people are turning 65 each day

The average American now spends about 20 years in retirement
(in 1950, the average was about 4 years)

4 in 10 Americans aged 51-59 are reaching retirement with limited or no savings,
and are projected to face a saving shortfall

~2/3 of the 40 million Americans 65 and older who receive Social Security benefits
depend on those benefits for ½ or more of their retirement income

It’s about 70 percent or more of income for those 80 or older

Only 60 percent of people who retire claim to have done any retirement planning at all

Delaying claiming Social Security “buys” people 6-8 percent more real benefits per year once they do take it

Olivia Mitchell, a professor at the Wharton School, University of Pennsylvania, explained this last point, noting that if a person stopped working at 62 but waited to claim benefits until 70, he or she would receive a benefit 76 percent higher in (real) dollars per month for life. “When to claim Social Security is many older Americans’ most important financial decision they will ever make in their lifetimes,” according to Mitchell.

Learn more about the event here and watch the video:

Video

• Helping America plan for retirement: Keynote remarks

In last Thursday’s GOP debate, Marco Rubio, Ted Cruz, Jeb Bush and Chris Christie managed to avoid mentioning their common proposal to “reform entitlements” by raising the Social Security retirement age from 67 to 70. That was probably a good idea. Their proposal only demonstrates their lack of understanding about the demographics of older Americans, especially the dramatic disparities in their life expectancy associated with education and race. Recent research on life expectancy indicates that their proposed change would effectively nullify Social Security for millions of Americans and sharply limit benefits for many millions more.. While many people in their 30s and 40s today can look forward to living into their 80s, the average life expectancy for the majority of Americans who do not hold a college degree hovers closer to 70, or the average life expectancy for all Americans in 1950.

The Widening Inequalities in the Life Spans of Americans

This research, summarized recently in a study published in Health Affairs, found that life expectancy for various age cohorts of Americans is closely associated with both educational achievement and race. For example, the average life expectancy for college-educated American men who were age 25 in 2008, or age 33 today, is 81.7 years for whites and 78.2 years for blacks. (Table 1, below) By contrast, the projected, average life span of high-school educated males, also age 25 in 2008 or 33 today, is 73.2 years for whites and 69.3 years for blacks. Women on average live longer than men; but similar disparities based on education and race are evident. The average life expectancy of women age 25 in 2008, or 33 years old today, was 79 years for whites and 75.4 years for blacks for those with a high school diploma, and 84.7 years for whites and 81.6 years for blacks with college degrees. Most disturbing, the average life expectancy of Americans age 25 in 2008 without a high school diploma is just 68.6 years for white men, 68.2 years for black men, 74.2 years for white women, and 74.9 years for black women. Surprisingly, the researchers found that Hispanics in this age group have the longest life expectancies, even though they also have the lowest average levels of education. Since these data are anomalous and may reflect sampling problems, we will focus mainly on the life-expectancy gaps between African American and white Americans.

Tallying How Many People Are Adversely Affected

Census data on the distribution by education of people age 25 to 34 in 2010 (ages 30 to 39 in 2015) provide a good estimate of how many Americans are adversely affected by these growing differences. Overall, 56.3 percent of all Americans currently in their 30s fall are high school graduates or left school without a high school diploma, educational groups with much lower average life expectancies. (Table 2, below) More precisely, 10.1 percent or almost 4.8 million Americans in their 30s today lack a high school diploma, and 46.2 percent or 18.9 million thirty-somethings have high school diplomas and no further degrees. All told, they account for 23,702,000 Americans in their 30s; and among older Americans, the numbers and percentages are even higher.

Since race as well as education are major factors associated with differences in life expectancy, we turn next to education by race (Table 3, below). The totals differ modestly from Table 2, because Census data on education by race cover ages 30-39 in 2014, while Table 2 covers age 30-39 in 2015 (ages 25-34 in 2010).

• Among people in their 30s today, 45.4 percent of whites or 10,613,000 Americans have a high school degree or less – and their average life expectancy is 9.4 years less than whites in their 30s with a college or associate degree.
• Among people in their 30s todays, 64.4 percent of blacks or 3,436,000 Americans have a high school degree or less – and their life expectancy is 8.6 years less than blacks in their 30s with an B.A. or associate degree, and 11.6 years less than whites with a college or associate degree..
• Among people in their 30s today, 75.6 percent of Hispanics or 6,243,000 Americans have a high school degree or less – and their life expectancy is 5.0 years less than Hispanics in their 30s with a college or associate degree.

As a policy matter, these data tell us that across all communities—white, black, Hispanic—improvements in secondary education to prepare everyone for higher education, and lower-cost access to higher education, can add years to the lives of millions of Americans.

Preserving Meaningful Access to Social Security Benefits

The widening inequalities in average life expectancy associated with race and education have more direct policy implications for Social Security, because the number of years that people can claim its benefits depends on their life spans. The growing inequalities in life expectancy translate directly into growing disparities in the years people can claim Social Security benefits, based on their education and race. Assuming that Americans in their 30s today retire at age 67 (the age for full benefits for this age group), they can expect to claim retirement benefits, on average, ranging from 1.2 years to 19.3 years, based on their education and race. (Table 4, below)

The most pressing issues of life expectancy and Social Security involve white males, black males, and black females without college degrees: Among Americans age 33 today, white and black men without high school diplomas and black males with high school degrees, on average, can expect to live long enough to collect benefits for less than three years. Similarly, white and black women without high school diplomas and black women with high school degrees, on average, can expect to collect benefits for less than eight years. Together, they account for 25.2 percent of whites and 64.4 percent of blacks in their 30s today. By contrast, male and female white college graduates age 33 today, on average, can expect to collect Social Security for between 14.7 and 17.7 years, respectively; and 33-year old black men and women with college degrees, on average, will claim benefits for 11.2 to 14.6 years, respectively.

These findings dictate that proposals to raise the Social Security retirement age should be rejected as a matter of basic fairness. Among this year’s presidential hopefuls, as noted earlier, Ted Cruz, Marco Rubio, Jeb Bush and Chris Christie all have called for raising the retirement age to 70 years. Under this policy, black men in their 30s today without a college degree and white men now in their 30s without a high school diploma, on average, would not live long enough to collect any Social Security. The change would reduce the average number of years of Social Security for Americans in their 30s today,

• From 1.6 years to -1.4 years for white men with no high school diploma,
• From 1.2 years to -1.8 years for black men with no high school diploma, and
• From 2.3 years to – 0.7 years for black, male high-school graduates.

Furthermore, among Americans in their 30s today, white and black women without a high school diploma, white male high school graduates, and black female high school graduates, would live long enough, on average, to collect Social Security for just 3.2 to 5.4 years. The GOP change reduce the average number of years of Social Security for Americans in their 30s today,

• From 6.2 years to 3.2 years for white, male high school graduates,
• From 7.2 years to 4.2 years for white women with no high school diploma,
• From 7.9 years to 4.9 years for black women with no high school diploma, and
• From 8.4 years to 5.4 years for black, female high-school graduates.

All told, proposals to raise the retirement age to 70 years old would mean, based on the average life expectancy of Americans in their 30s today, that 25.2 percent of whites in their 30s and 64.4 percent of blacks of comparable age, after working for 35 years or more, would receive Social Security benefits for 5.4 years or less.

Ahead of Tuesday’s primary elections in Ohio, Florida and other states, the 2016 presidential candidates have been talking about the future of Social Security and its funding shortfalls.

Over the next two decades, the money flowing into Social Security will be too little to pay for all promised benefits. The reserve fund will be exhausted soon after 2030, and the only money available to pay for benefits will be from taxes earmarked for the program. Unless Congress and the President change the law before the reserve is depleted, monthly benefits will have to be cut about 21%.

Needless to say, office holders, who must face voters, are unlikely to allow such a cut. Before the Trust Fund is depleted, lawmakers will agree to some combination of revenue increase and future benefit reduction, eliminating the need for a sudden 21% pension cut. The question is: what combination of revenue increases and benefit cuts does each candidate favor?

The candidate offering the most straightforward but least credible answer is Donald Trump. During the GOP presidential debate last week, he pledged to do everything within his power to leave Social Security “the way it is.” He says he can do this by making the nation rich again, by eliminating budget deficits, and by ridding government programs of waste, fraud, and abuse. In other words, he proposed to do nothing specifically to improve Social Security’s finances. Should Trump’s deal-making fail to make us rich again, he offered no back-up plan for funding benefits after 2034.

The other three GOP candidates proposed to repair Social Security by cutting future pensions. No one in the debate, except U.S. Sen. Marco Rubio from Florida, mentioned a specific way to accomplish this. Rubio’s plan is to raise the age for full retirement benefits. For many years, the full retirement age was 65. In a reform passed in 1983, the retirement age was gradually raised to 66 for people nearing retirement today and to 67 for people born after 1960. Rubio proposes to raise the retirement age to 68 for people who are now in their mid-40s and to 70 for workers who are his children’s age (all currently under 18 years old).

In his campaign literature, Rubio also proposes slowing the future rate of increase in monthly pensions for high-income seniors. However, by increasing the full retirement age, Rubio’s plan will cut monthly pensions for any worker who claims benefits at 62 years old. This is the earliest age at which workers can claim a reduced pension. Also, it is by far the most common age at which low-income seniors claim benefits. Recent research suggests that low-income workers have not shared the gains in life expectancy enjoyed by middle- and especially high-income workers, so Rubio’s proposed cut could seriously harm many low-income workers.

Though he didn’t advertise it in the debate, Sen. Ted Cruz favors raising the normal retirement age and trimming the annual cost-of-living adjustment in Social Security. In the long run, the latter reform will disproportionately cut the monthly pensions of the longest-living seniors. Many people, including me, think this is a questionable plan, because the oldest retirees are also the most likely to have used up their non-Social-Security savings. Finally, Cruz favors allowing workers to fund personal-account pensions with part of their Social Security contributions. Although the details of his plan are murky, if it is designed like earlier GOP privatization plans, it will have the effect of depriving Social Security of needed future revenues, making the funding gap even bigger than it is today.

The most revolutionary part of Cruz’s plan is his proposal to eliminate the payroll tax. For many decades, this has been the main source of Social Security revenue. Presumably, Cruz plans to fund pensions out of revenue from his proposed 10% flat tax and 16% value-added tax (VAT). This would represent a revolutionary change because up to now, Social Security has been largely financed out of its own dedicated revenue stream. By eliminating the independent funding stream, Cruz will sever the perceived link between workers’ contributions and the benefits they ultimately receive. Most observers agree with Franklin Roosevelt that the strong link between contributions and benefits is a vital source of the enduring popularity of the program. Social Security is an earned benefit for retirees rather than a welfare check.

Gov. John Kasich does not propose to boost the retirement age, but he does suggest slowing the growth in future pensions by linking workers’ initial pensions to price changes instead of wage changes. He hints he will impose a means test in calculating pensions, reducing the monthly pensions payable to retirees who have high current incomes. Many students of Social Security think this a bad idea, because it can discourage workers from saving for retirement.

All of the Republican candidates, except Trump, think Social Security’s salvation lies in lower benefit payouts. Nobody mentions higher contributions as part of the solution. In contrast, both Democratic candidates propose raising payroll or other taxes on workers who have incomes above the maximum earnings now subject to Social Security contributions. This reform enjoys broad support among voters, most of whom do not expect to pay higher taxes if the income limit on contributions is lifted. Sen. Bernie Sanders would immediately spend some of the extra revenue on benefit increases for current beneficiaries, but his proposed tax hike on high-income contributors would raise enough money to postpone the year of Trust Fund depletion by about 40 years. Hillary Clinton is less specific about the tax increases and benefit improvements she favors. Like Sanders, however, she would vigorously oppose benefit cuts.

None of the candidates has given us a detailed plan to eliminate Social Security’s funding imbalance. At this stage, it’s not obvious such a plan would be helpful, since the legislative debate to overhaul Social Security won’t begin anytime soon. Sanders has provided the most details about his policy intentions, but his actual plan is unlikely to receive much Congressional support without a massive political realignment. Cruz’s proposal, which calls for eliminating the Social Security payroll tax, also seems far outside the range of the politically feasible.

What we have learned from the GOP presidential debates so far is that Republican candidates, with the exception of Trump, favor balancing Social Security through future benefit cuts, possibly targeted on higher income workers, while Democratic candidates want to protect current benefit promises and will do so with tax hikes on high-income workers. There is no overlap in the two parties’ proposals, and this accounts for Washington’s failure to close Social Security’s funding gap.

Editor’s note: This piece originally appeared in Fortune.

The long-term finances of Social Security are in bad shape. Its reserves are expected to run out in less than 20 years, and under current law that will force cuts in benefits.

Some experts argue that the best way to get the system’s finances back in shape would be to raise the full retirement age above the scheduled 67. That would bolster the program’s finances in two ways. First, by increasing payroll tax revenues, because people would work longer. And second, by reducing the period each American would collect benefits.

That approach might seem fair, since on average Americans are living longer. Life expectancy is more than 15 years higher than when Social Security began in 1937.

But we are not all average. Lower-income Americans have not seen much increase in life expectancy, while more affluent people have. Thus raising the retirement age would cut total lifetime benefits proportionately more for those on the bottom rungs of the income ladder.

But let’s think differently about Social Security. Right now, monthly checks are linked to a person’s earnings during their working years. So, better-paid workers get bigger checks. True, lower-paid workers pay much less in Social Security payroll taxes and usually get back much more than they paid in taxes – even counting in interest on their tax contributions. Upper-income workers typically get back a lot less than they paid in, despite larger checks.

But low-wage workers still get smaller Social Security checks to try to meet their monthly needs in retirement. Many end up falling below the poverty line and have to apply for means-tested assistance from Supplementary Security Income (SSI), another part of the Social Security system.

What if we were to recast regular Social Security as true insurance? Insurance is something that pays out only when things go wrong. If you don’t have a car crash, or your house doesn’t burn down, you don’t get your premiums back later in life. What you do get is protection and peace of mind.

So imagine Social Security as insurance protection against being financially insecure in retirement. If it were that, it would be very different from today.

For one thing, we would want the lowest-income retirees to get the largest regular check – assuming they had dutifully paid their payroll tax “premiums” when working – and also enough to keep them comfortably out of poverty without having to rely on SSI. Some retirees with a modest income from, say, an IRA, might still need a small Social Security “insurance payout” to maintain a reasonable standard of living.

In a true insurance model like this, retired Americans with healthy income from assets would get no Social Security check at all, rather than getting the largest checks as they do today. If Social Security is seen as insurance against financial insecurity then Warren Buffet clearly doesn’t need a check. Nor do other older Americans for whom a monthly Social Security check is just a little bit more icing on an already rich cake.

If we reformed Social Security to make it more like real insurance, we’d need to do it gradually so people could plan, with the changes only fully affecting workers who are perhaps in their early 40s today. There would be a significantly higher basic benefit check for the least well-off. For retired singles with retiree income over, say, $25,000 in today’s dollars, the check would be reduced according to income until for a retiree with, say, $100,000 in other income there would be no check at all.

With this reform, regular Social Security would more efficiently protect the elderly against economic insecurity and from poverty without the stigma of applying for SSI “welfare.” And it would help put the program on a more secure footing. To be sure, some would say it’s not fair that many Americans would pay Social Security taxes and get nothing in return. But that misses the point that Social Security should be insurance. And what’s really not fair is that many today pay high payroll taxes for a check that doesn’t keep them out of poverty.

Some other critics might argue that without checks for all, the coalition needed to preserve Social Security would unravel. I doubt that very much. Social Security has an iconic status in America and there is no public support for ending it.

So let’s not allow Social Security’s deteriorating finances to make it a steadily worse deal for those who need it most. It’s time instead to look at a reform that refocuses its mission on insuring financial security for seniors.

Editor's note: This piece originally appeared in Real Clear Markets.

Recently, Brookings has posted two articles commenting on proposals to raise the full retirement age for Social Security retirement benefits from 67 to 70. One revealed a fundamental misunderstanding of how the program actually works and what the effects of the policy change would be. The other proposes changes to the system that would subvert the fundamental purpose of the Social Security in the name of ‘reforming’ it.

A number of Republican presidential candidates and others have proposed raising the full retirement age. In a recent blog, Robert Shapiro, a Democrat, opposed this move, a position I applaud. But he did so based on alleged effects the proposal would in fact not have, and misunderstanding about how the program actually works. In another blog, Stuart Butler, a conservative, noted correctly that increasing the full benefit age would ‘bolster the system’s finances,’ but misunderstood this proposal’s effects. He proposed instead to end Social Security as a universal pension based on past earnings and to replace it with income-related welfare for the elderly and disabled (which he calls insurance).

Let’s start with the misunderstandings common to both authors and to many others. Each writes as if raising the ‘full retirement age’ from 67 to 70 would fall more heavily on those with comparatively low incomes and short life expectancies. In fact, raising the ‘full retirement age’ would cut Social Security Old-Age Insurance benefits by the same proportion for rich and poor alike, and for people whose life expectancies are long or short. To see why, one needs to understand how Social Security works and what ‘raising the full retirement age’ means.

People may claim Social Security retirement benefits starting at age 62. If they wait, they get larger benefits—about 6-8 percent more for each year they delay claiming up to age 70. Those who don’t claim their benefits until age 70 qualify for benefits -- 77 percent higher than those with the same earnings history who claim at age 62. The increments approximately compensate the average person for waiting, so that the lifetime value of benefits is independent of the age at which they claim. Mechanically, the computation pivots on the benefit payable at the ‘full retirement age,’ now age 66, but set to increase to age 67 under current law. Raising the full retirement age still more, from 67 to 70, would mean that people age 70 would get the same benefit payable under current law at age 67. That is a benefit cut of 24 percent. Because the annual percentage adjustment for waiting to claim would be unchanged, people who claim benefits at any age, down to age 62, would also receive benefits reduced by 24 percent.

In plain English, ‘raising the full benefit age from 67 to 70' is simply a 24 percent across-the-board cut in benefits for all new claimants, whatever their incomes and whatever their life-expectancies.

Thus, Robert Shapiro mistakenly writes that boosting the full-benefit age would ‘effectively nullify Social Security for millions of Americans’ with comparatively low life expectancies. It wouldn’t. Anyone who wanted to claim benefits at age 62 still could. Their benefits would be reduced. But so would benefits of people who retire at older ages.

Equally mistaken is Stuart Butler’s comment that increasing the full-benefit age from 67 to 70 would ‘cut total lifetime retirement benefits proportionately more for those on the bottom rungs of the income ladder.’ It wouldn’t. The cut would be proportionately the same for everyone, regardless of past earnings or life expectancy.

Both Shapiro and Butler, along with many others including my other colleagues Barry Bosworth and Gary Burtless, have noted correctly that life expectancies of high earners have risen considerably, while those of low earners have risen little or not at all. As a result, the lifetime value of Social Security Old-Age Insurance benefits has grown more for high- than for low-earners. That development has been at least partly offset by trends in Social Security Disability Insurance, which goes disproportionately to those with comparatively low earnings and life expectancies and which has been growing far faster than Old-Age Insurance, the largest component of Social Security.

But even if the lifetime value of all Social Security benefits has risen faster for high earners than for low earners, an across the board cut in benefits does nothing to offset that trend. In the name of lowering overall Social Security spending, it would cut benefits by the same proportion for those whose life expectancies have risen not at all because the life expectancy of others has risen. Such ‘evenhandeness’ calls to mind Anatole France’s comment that French law ‘in its majestic equality, ...forbids rich and poor alike to sleep under bridges, beg in streets, or steal loaves of bread.’

Faulty analyses, such as those of Shapiro and Butler, cannot conceal a genuine challenge to policy makers. Social Security does face a projected, long-term funding shortfall. Trends in life expectancies may well have made the system less progressive overall than it was in the past. What should be done?

For starters, one needs to recognize that for those in successive age cohorts who retire at any given age, rising life expectancy does not lower, but rather increases their need for Social Security retirement benefits because whatever personal savings they may have accumulated gets stretched more thinly to cover more retirement years.

For those who remain healthy, the best response to rising longevity may be to retire later. Later retirement means more time to save and fewer years to depend on savings. Here is where the wrong-headedness of Butler’s proposal, to phase down benefits for those with current incomes of $25,000 or more and eliminate them for those with incomes over $100,000, becomes apparent. The only source of income for full retirees is personal savings and, to an ever diminishing degree, employer-financed pensions. Converting Social Security from a program whose benefits are based on past earnings to one that is based on current income from savings would impose a tax-like penalty on such savings, just as would a direct tax on those savings. Conservatives and liberals alike should understand that taxing something is not the way to encourage it.

Still, working longer by definition lowers retirement income needs. That is why some analysts have proposed raising the age at which retirement benefits may first be claimed from age 62 to some later age. But this proposal, like across-the-board benefit cuts, falls alike on those who can work longer without undue hardship and on those in physically demanding jobs they can no longer perform, those whose abilities are reduced, and those who have low life expectancies. This group includes not only blue-collar workers, but also many white-collar employees, as indicated by a recent study of the Boston College Retirement Center. If entitlement to Social Security retirement benefits is delayed, it is incumbent on policymakers to link that change to other ‘backstop’ policies that protect those for whom continued work poses a serious burden. It is also incumbent on private employers to design ways to make workplaces friendlier to an aging workforce.

The challenge of adjusting Social Security in the face of unevenly distributed increases in longevity, growing income inequality, and the prospective shortfall in Social Security financing is real. The issues are difficult. But solutions are unlikely to emerge from confusion about the way Social Security operates and the actual effects of proposed changes to the program. And it will not be advanced by proposals that would bring to Social Security the failed Vietnam War strategy of destroying a village in order to save it.