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More ways to fix Social Security

By Jennie L. Phipps ·
Tuesday, June 7, 2011
Posted: 4 pm ET

There have been many suggestions for repairing the Social Security shortfall. A report offered today by the National Academy of Social Insurance presented some new-to-me ideas:

  • Raise FICA rate by one-twentieth of 1 percent per year over 20 years, up to 7.2 percent in 2035 -- 63 percent fix.
  • Dedicate to Social Security a revamped estate tax to apply a 45 percent rate to the portion of estates in excess of $3.5 million for individuals, or $7 million for couples -- 23 percent fix.
  • Dedicate to Social Security a 0.25 percent financial speculation tax on the purchase and sale of publicly traded stock, credit swap derivatives, and other financial instruments -- 93 percent fix.
  • Dedicate to Social Security a 5 percent surtax on adjusted gross income in excess of $1 million -- 45 percent fix.
  • Cover all contributions to salary reduction plans -- 10 percent fix.

The report also points out that the value of Social Security for people born after 1960 will be cut by 19 percent thanks to the changes enacted in 1983, a serious retirement planning challenge for younger savers. These are the changes that add up to that 19 percent:

  • Raising the full retirement age to 67
  • Tax on 50 percent of Social Security for couples earning $32,000 or more and individuals making $25,000 or more. (Most people will pay thanks to inflation.)
  • A six-month delay of the onset of cost-of-living adjustments.

The National Academy of Social Insurance would not only reverse these cutbacks, but it would also like to see three additions to Social Security to strengthen it:

  • Update the special minimum benefit to ensure that low-income workers can retire at age 62 after 30 years of work without facing the prospect of impoverishment.
  • Restore benefits for children of disabled or deceased workers until age 22 while they are in college or vocational school.
  • Improve benefits for the oldest to compensate for inflation.

It feels odd to talk about improvements to Social Security in the midst of the furor over the national debt, but in the long run, keeping large segments of the population solvent and spending money is a huge plus for the economy.

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June 10, 2011 at 5:52 pm


Can you do an editorial piece marrying social security, American’s ability to save and the impact on society?
I so tired of the talk about privatizing social security when time and time again you write articles about how terrible American’s are at savings. (I see it every day, occupational hazard.) If we get rid of social security we will have A LOT of homeless people and it puts the population as a whole in a precarious health and safety situation.

The argument for privatizing is that individuals can manage their money better than the government. Really? Is that what the past has shown us? No, it has shown us that social security has successfully paid for 70+ years of benefits and that individual retirement accounts are beyond inadequate for a majority of the population.

Politicizing Social Security is right up there with politicizing global warming. Let’s be realistic about what we are and do things as a society and stop thinking we are each a competitive island.

June 08, 2011 at 11:03 pm

All of you are wrong. SS is by far the most efficient retirement program in the US. (Less than 1 penny per hundred for administrative costs.) 401K's easily eat up a third of gains through administrative costs.

The traditional assumption was the three legged stool. Personal savings. (usually a paid off house.), SS and an employer provided pension plan.(now replaced by a 401 K.)

The easiest fix is to lift the earnings tax cap.

See for a discussion about the benefits of social insurance.

Vaughn Myers
June 08, 2011 at 2:33 pm

President you need to come clean with the american people about
This social security thing. these wars are costing the american
People a great deal of money and you know that. all you speak of
Is for the young people. What about these senior citizens living
Off a ten year old pension. The cost of living is out of sight
For them. you may get four more years if you were to be trueful
With the seniors.

June 08, 2011 at 1:20 pm

Full retirement age is ALREADY 67. You receive reduced benefits at age 62 to 67. They are called reduction factors. Too much income redistribution on your proposals. SSA is the mother-machine of income redistribution. Tax the rich, give the poor. Again, what are the incentives of making good money inthis country anymore? Surtax, tax, tax, poor people get more than rich people, in other words, give more to those who paid less. I think I STILL live in a capitalist society. You are NOT entitled to something YOU didn't pay for. You can work all of your life 30-40 yrs and pay your SSA taxes and in about 3-4 years, all the money you paid into the system in taxes plus interest goes back to you. Years 5- until you die are on the shoulders of the young generations. Try cutting spouse benefits, disabled children's benefits, divorced spouses benefits and the lame lump sum death payment. More common sense SSI entitlement policy and let SSI pay part of SSA.

June 08, 2011 at 12:24 pm

Thank you, ASH!!

Retirement of 62 made sense when people were only slated to live to 72 or 77. People are living in retirement for sometimes THIRTY years! All the while collecting those checks that are coming out of my pocket. Meanwhile, I can't afford to make contributions to my OWN retirement, with the costs of living being SO high and annual increase in salary of only 2%! Also live in a state where all the jobs are in one location, but I can only afford to live 45 miles away, so gas prices are punishing. Between the cost of food, gas and daycare I would actually be better off just not working and collecting from all the government programs! IF I was the type of person that would live with no pride!

I am NOT ok with raising taxes to fix these problems. All of these entitlement programs need an overhaul and Obabmacare needs to be repealed. I don't want the government telling me how to manage my healthcare! That's is for me and my doctor to decide!

June 08, 2011 at 6:28 am

Balderdash, more tinkering won't fix a broken system. People don't want the tough love that will solve this problem. No benefits to anyone unless they're at least 67 years old and make less than the then-current poverty level and have no other assets. No taxes whatsoever on benefits recieved. The rest of us get to pay a reasonable tax to pay for the much-reduced program costs.

SS was never meant to be supplemental income to help you enjoy retirement. You're supposed to work and save for that privilege. SS was intended to, and should be used to, keep the truly unfortunate eldery from living on the street.

But the huge block of voting seniors in this country will never vote for a politician courageous enough to espouse the necessary changes. Once you're suckling from the government teat, you don't want anyone trying to wean you.

Respect my elders? Hardly. You people are stealing from me.