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A solution for Social Security

By Barbara Whelehan ·
Friday, August 10, 2012
Posted: 5 pm ET

A new AARP survey came out this week painting yet another dismal picture of retirement for baby boomers.

Let's gloss over all the usual dire statistics about how most boomers (72 percent) say they'll have to delay retirement and that half of them believe they'll never be able to retire. I'm so tired of bad news! Instead, let's look at what those age 50 and up really want to know this year:  What do the two presidential candidates plan to do about programs such as Social Security?

It seems that both President Barack Obama and Mitt Romney have avoided the subject. At least, that's the perception of the majority of boomers surveyed by AARP. Two-thirds say the candidates haven't done a good job of explaining their plans for Social Security. And they're right about that.

A promising idea

But that doesn't mean no new initiatives were introduced in our nation's capital. In March, the Rebuild America Act introduced "fiscally responsible" solutions to improve Social Security benefits, among other things. Sen. Tom Harkin, D-Iowa, alludes to the Act in the report he released more recently called, "The retirement crisis and a plan to solve it."

I wrote about part one of Harkin's solution last week. It calls for the creation of privately run USA Retirement pension funds available to all workers who don't already have access to a retirement plan. Companies wouldn't be responsible for funding it, though they would have to automatically enroll their workers and contribute something to it. The details are sketchy, but overall I think his plan is a good idea because it would help Americans with their retirement planning. On the other hand, they don't have to participate if they don't want to.

Early this week, Sen. Harkin sent a message to all those in the plan sponsor community -- i.e., businesses -- asking for feedback about his plan, as well as suggestions and ideas. Check out his plan and tell him what you think. Send your opinion to

A Social Security fix

Part two of Harkin's plan involves strengthening Social Security. He would do that by tweaking the way benefits are calculated so that more people at the lower end and middle part of the income spectrum would get a bit of a bump up in pay -- about $60 a month, he calculates.

He'd also change the index on which cost of living adjustments are based. Instead of the Consumer Price Index for all Urban Wage Earners, or CPI-W, which does not particularly reflect the inflation rate experienced by seniors, the COLAs would be based on the Consumer Price Index for the Elderly, or CPI-E. That would help seniors keep up with health care costs.

His biggest idea to improve Social Security: Lift the cap on wages, currently $110,100, subject to the payroll tax. The change wouldn't be immediate; it would be phased in over 10 years. And higher wage earners would see a bit of a return on their investment.

I think this makes a lot of sense. Why should people who make more than $110,000 be subject to less tax on a percentage basis than people who make less?

In any event, I look forward to hearing what the presidential candidates have to say about preserving Social Security. It's an important program that everybody relies on, with the possible exception of the wealthiest 1 percent.


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