At this time of year, we are treated to smiles and good wishes in our mailboxes every day. It is the U.S. Postal Service’s busiest time of the year as mail carriers deliver Christmas cards and holiday gifts across the country.

It is a joy to receive those yearly updates about family and friends. But, in this age of technology, much of that information has already been posted on websites such as Facebook in real time.

Today, instead of only mailing letters and cards, we now Skype, email, and Tweet. Welcome to the 21st century. We’re communicating with each other more than ever — but often using keyboards and smartphones rather than the mail.

This shift from traditional mail to electronic communication has come at an enormous cost to the U.S. Postal Service. The loss of so much hard-copy mail, high labor costs, expensive unfunded retiree health benefits, as well as the continued requirement to hand-deliver mail to every address in the nation, all pose significant financial burdens for the Postal Service.

These challenges have been exacerbated by the worst recession in decades — leaving the Postal Service on the edge of financial collapse.

Despite the expanded use of new communication technologies, a collapse of the Postal Service would devastate our economy. It operates at the center of a mailing industry that employs more than 8.5 million people and generates almost $1 trillion in economic activity every year. Everyone — from big retailers to small businesses to online shops — relies on the Postal Service to deliver packages, advertise services and send out bills. Take that away and businesses and consumers would suffer.

The situation is dire, but not hopeless. With the right tools and action from Congress and the Obama administration, the Postal Service can reform, right-size and modernize.

So how do we update the Postal Service’s business model — successful for more than 200 years, but less so for the past 10 — to reflect the changing demands of this century? By helping the Postal Service do three things: reduce operating costs; modernize its business model; and innovate to generate new revenue.

We have introduced a bipartisan solution to reform and modernize the Postal Service, titled The 21st Century Postal Service Act. The Homeland Security and Governmental Affairs Committee, of which we are members, has approved this legislation to help put the Postal Service on a sustainable financial path.

Our bill would fundamentally reform the Postal Service in several ways:

First, it would reduce operating costs. When the Postal Service underpays its pension costs each year, the federal government’s pension system bills the Postal Service for the difference. But when it overpays, the federal government just keeps the cash. The Postal Service has now overpaid its pension obligations to the Federal Employee Retirement System by approximately $11 billion. Our bill would return the nearly $11 billion to the Postal Service and direct the Postmaster General to use some of it for retirement and separation incentives.

Nearly 150,000 postal workers are at or near retirement. The goal is to encourage roughly 100,000 of them to retire. The Postal Service estimates this would save about $8 billion a year.

In addition, our bill helps save the Postal Service (and the federal government) money by reforming the federal workers’ compensation program — where 40 percent of all claimants are postal workers — in a humane manner. It would bring federal benefits more in line with compensation levels offered under most states’ laws and encourage more employees who are able to work to return to the work force.

Second, the bill would help modernize. The Postal Service needs to “right-size” its operations to reflect the changes in demand for its products and services.

These changes are never easy. Our bill helps the Postal Service consider the right factors, minimize the pain and maximize public input to complete necessary, but responsible, downsizing in its network of facilities, but do so without undermining its legal obligation to serve all of the country.

Third, the bill would address ways to increase revenue. We should give the Postal Service tools to offer new products and services, such as shipping beer and wine, as its competitors FedEx and UPS do. This also lets the Postal Service turn a perceived liability — a nationwide retail, transportation and delivery network — into an asset that can bring in new revenue.

We are not crying “wolf.” If nothing is done, the Postal Service will not be able to make payroll next summer — stopping mail delivery in its tracks and wreaking havoc on our already fragile economy. To prevent this, we must pass a comprehensive reform bill.

If we don’t, the Postal Service will fail — destroying an American institution, enshrined in the Constitution.

U.S. Sens. Susan Collins, Joe Lieberman, Tom Carper and Scott Brown are the co-authors of the 21st Century Postal Service Act and members of the Senate Homeland Security and Governmental Affairs Committee with oversight of the U.S. Postal Service.