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State of retirement

By Jennie L. Phipps · Bankrate.com
Monday, January 24, 2011
Posted: 5 pm ET

Retirement planning takes center stage Tuesday night along with President Barack Obama.

The Washington Post reported on Monday that over the weekend Obama decided that during the State of Union address he won't endorse the deficit commission's recommendation to raise the retirement age and otherwise reduce Social Security benefits by changing how the cost of living is calculated. But he is expected to say changes are needed to put Social Security on solid footing, and that these propositions won't be excluded from consideration as lawmakers look for potential solutions.

Who knows exactly what that means. It sounds wishy-washy. Although I would guess that any U.S. president who fiddles with Social Security during his first term is destined to be a one-term wonder, and that's a fate Obama would surely like to avoid.

Doing nothing doesn't sound career enhancing, either. A national Harris poll conducted last week shows that 82 percent of Americans think the current administration is doing a bad job of solving Social Security's problems. At least we can agree on something.

What are the right steps to take?

Actuary Tom Terry, chairman of the Public Interest Committee of the American Academy of Actuaries, supports increasing retirement age in any reform package. "Increasing life expectancy has led to an expansion of the program's lifetime benefits and system costs, but an increase in the retirement age would help curb this cost growth," he says.

Others would adjust the amount of taxes collected. Robert Ricketts, a professor of taxation at the Rawls College of Business at Texas Tech University, says, "Congress should consider raising or eliminating the earnings ceiling on (Social Security) taxes, which would allow the tax rate to be reduced substantially."

I'm for doing a little bit of both of these things.

What do you think?

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2 Comments
Tom Johnson
February 22, 2011 at 12:03 pm

I agree, do a little of both.

Yagermeister
January 25, 2011 at 10:14 am

I don't think raising the retirement age again would do as much for cutting the shortfall that raising the age in which workers can begin taking retirement benefits.

Age 62 is when around half of people begin to take benefits. This is the number that should increase. If that were bumped a year or two, that would make a huge difference in outflow.