I read in about 20 years or so if congress and our president do nothing to fix social security, everyone will face an immediate 21% cut to their
social security benefits. This does not sound like a good plan.
There are several proposals to fix it that will not. Link below.
Things that won't fix it are:
1. Eliminating fraud. Even if we could get rid of the fraud, it would only fix 3% of the solvency gap.
2. Taxing investment income. That is merely a shell game that reduces government tax revenue in other areas as you raise it for one thing, it drops
for everything else.
3. Grow the economy. Doubling expectations of growth rates is not realistic and even if the growth rate increased by 75%, according to the urban
institute as quoted in the link provided above, the solvency gap would only close by about a third.
4. Make the rich pay the same as everyone. Eliminating the taxable max would fix 2/3 of the solvency gap but that still would leave a 30% solvency
5. Do nothing. In 2034 the trust fund is out of money and everyone faces a 21% immediate cut in benefits. For today's 50 years olds and younger,
that represents a cut of $100,000 or more in lifetime benefits paid out to you. Figures from the link provided above. Doing nothing is the worst
choice for almost everyone.
What can we do?
My solution using information obtained from here. crfb.org...
Eliminate the income max gap.
Increase the payroll tax by 1 % total spread out by .1% increase over ten years.
Index the full retirement age for longevity which reaches 67 in 2027. Basically the retirement age I believe goes up by a month every two years.
Reduce fraud and overpayments. 5% fix.
Cover newly hired state and local workers and bring them into the system so that they are paying as well.
9% fix if assumptions are correct.
Increase long term revenue by investing funds in the stock market. A 21% fix over 75 years.
This fixed social security per this web site.
Now this article linked here provides a sensible plan to fix social security.
It covers many of the same things I already mentioned. It also says that neither presidential candidates plan fixes social security.
It proposes raising the maximum taxable income gap up to 195,000 if I remember correctly which will solve a majority of the issue but not all of it.
The article proposes raising payroll tax up by 1.3% on employees and 1.3% on employers and spreading out the proposed increase over 10 years to
minimize the effect.
Index the retirement age for longevity like I already mentioned.
The article suggests using a more accurate measure of inflation for benefit increases like chained CPI.
I came up with a fix here which I already provided a link.
How would you fix it?