Image source: Pixabay. 

The future of Social Security, the program designed to provide a financial backstop for low-income retirees as well as for the disabled and survivors of deceased workers, could once again be the most front-and-center issue in the 2016 presidential election.

Why Social Security takes center stage
The fact that Social Security remains a hot-button issue really shouldn't be a surprise to anyone. There are nearly 60 million people currently receiving Social Security benefits, including more than 40 million retired workers, and this number is only expected to increase substantially as baby boomers move headlong into retirement. But the real issue is the perceived unsustainability of the program.

Based on the Social Security Trustees' latest report, the Old-Age, Survivors, and Disability Insurance Trust Fund has a strong enough cash reserve to last until 2035. At that point, after numerous years of more cash leaving the OASDI than heading in, the program will have depleted its cash reserves. The solution at that point, if Congress hasn't already implemented a fix, would be a 21% across-the-board benefits reduction to ensure the survival of the program for an additional 52 years (at least according to the Trustees' projections).

The reason behind this shortfall? It's a mixture of people living longer than ever, and thus being able to draw down on the OASDI for longer periods of time, along with baby boomers leaving the workforce. As boomers retire, there simply aren't enough new workers entering the labor force. The result? The worker-to-beneficiary ratio is falling, and an annual cash inflow will soon turn into a cash outflow, leading to the consumption of the OASDI's cash reserves by 2035 if nothing is done.

This is why Social Security is such a keynote issue in this election, and why it's been such a talked about issue in past elections -- it affects everyone. If you work, you're probably paying into the Social Security program and covered by it. Whether you're in your mid-20s or mid-60s, Social Security is a program you may one day, or soon, count on. Thus, it's important to understand where the candidates stand on this hot-button topic.

Image source: Hillary Clinton. 

Six things we know about Hillary Clinton's Social Security stance
Democratic frontrunner Hillary Clinton made waves over the past week by outlining some key points of her Social Security strategy. Let's take a closer look at six things we now know based on a tweet, as well as campaign proposals found on Clinton's website.

1. Clinton is willing to pledge not to cut Social Security benefits
According to a tweet from Hillary Clinton last week, she's taken a pledge pressed upon her by primary rival Bernie Sanders not to decrease Social Security benefits if she makes it into the oval office.

Clinton has made it a point in her speeches and campaign rhetoric that she'd like to expand benefits for working class Americans who lean more heavily on Social Security income during retirement to pay their bills. This tweet serves as a talking point for seniors and pre-retirees heading into the heart of election season.

2. She won't reduce cost-of-living adjustments
An interesting component of Clinton's proposal is that she won't stand for the idea of reducing cost-of-living adjustments, or COLAs, for Social Security recipients.

Image source: Pixabay.

The COLA for Social Security is determined annually by the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The adjustment in benefits is supposed to mirror growth in the CPI-W, but the spending habits of seniors and those of workers don't always align. Clinton hasn't indicated if she'd be in favor of using the CPI-E, or Consumer Price Index for the Elderly, for COLA calculations since it would possibly better represent the spending habits of seniors, which make up the bulk of Social Security benefit recipients -- but she's clearly against anything that would reduce the rate of benefit adjustments in future years.

3. She won't agree to raise the retirement age
It's an idea that's been proposed by Republican presidential candidates Chris Christie and Jeb Bush, but Hillary Clinton is drawing a line in the sand at the idea of raising the retirement age for Social Security recipients.

Bush and Christie suggest that raising the retirement age would coerce consumers to work longer. Working longer would allow these taxpayers to use their wages to pay everyday expenses, while their Social Security retirement benefits would continue to grow at a rate of 8% per year.

The problems with raising the retirement age? First, there are workers who can't afford to wait to file for Social Security benefits, either for financial reasons, or because their health won't allow them to continue working. Filing at the earliest age possible will subject these workers to benefits that are far below their full retirement benefits. Also, it's also been suggested that raising the retirement age would favor the richest Americans since they already tend to live the longest due to their ease of access to medical care.

4. She's not in favor of a partial or full privatization of Social Security
As we've discussed previously, one policy suggestion that's been off the table with Clinton for as long as reporters have been covering her political ascent has been the idea of privatizing Social Security.

Image source: Pixabay.

Privatization involves allowing taxpayers to invest part, or all, of their future benefits into investment vehicles that have an opportunity to outperform the safe, fixed-income investments that the Social Security Trust is often invested in.

While this might sound great on paper, and an investment vehicle such as the stock market has handily outperformed inflation over the long run, Clinton fears the idea of putting workers who don't have a good understanding of financial concepts in charge of their future. It's possible that poor investment decisions could put some taxpayers in even more precarious situations.

5. She wants to expand benefits for widows and caregivers
Hillary has championed herself as someone who'll fight for working-class Americans if she's elected president, but she's also been outspoken about a specific group of people within the working class: women.

The reason women deserve special consideration when it comes to Social Security is that they often work fewer years than their male counterparts, and typically earn less. This usually means that there's a tendency for women to rely on spousal support and survivor benefits, since women live an average of five years longer than men in the United States. Clinton wants to bolster benefits for women, including widows and caregivers who need to take time off from work to take care of loved ones.

6. She wants wealthier Americans to contribute more
The final component to Clinton's Social Security plan is that she wants well-to-do individuals to contribute more in order to help curb the expected cash reserve shortfall in the OASDI.

This is an issue that Clinton has wavered on in the past. In the 2008 presidential debates, Clinton opposed the idea of raising the payroll tax cap, which is currently cut at $118,500 in income. Any income earned above this amount is not subject to the Social Security payroll tax. More recently, though, Clinton has changed her stance toward one that would endorse wealthier Americans paying more into the program.

Image source: Flickr user Joi Ito.

One big question mark in Clinton's Social Security plan
There's just one issue with Clinton's bullet points on Social Security: she hasn't solidified exactly how she'd enhance benefits for the working class or ensure that well-to-do individuals pay more. For instance, we know Clinton has suggested that she might be open to a payroll tax cap increase similar to what Bernie Sanders has called for, but she hasn't endorsed the idea officially.

It's worth noting that in an informal poll from The Washington Post, the idea of raising the payroll tax cap was by far the most popular. Raising the payroll tax cap would only affect a very small percentage of the population, so it tends to be well-liked in polls.

Even if Clinton does plan to boost benefits by using additional contributions from richer Americans, there are still potential pitfalls. For instance, paying more into the system should yield wealthier Americans better benefits come retirement, but the well-to-do would not receive a commensurate boost in benefits despite their increased contribution. Wealthier individuals are also generally considered a strong source for investment and job creation. Taking more money out of the hands of these individuals may hurt job creation.

In addition to revenue creation questions, Clinton also hasn't outlined how she'd ensure widows, caregivers, seniors, and the working class will see their benefits enhanced.

In Clinton's defense, we're still early in the election cycle, but voters are going to expect a detailed plan that they can comb through soon. With plenty of questions left to be answered, keep your eyes open for a detailed Social Security reform proposal from Hillary Clinton in the not-so-distant future.