3/6/2013 1:30 PM ET|
5 ways to fix Social Security now
In 20 years, benefit cuts will be needed unless changes are made to the system beforehand. Here are some suggestions for shoring up the account.
The Social Security trust fund is expected to be exhausted in 2033. After that, there will be enough tax revenue coming in to pay out about 75% of promised benefits. However, just a few changes to the system could prevent these steep benefit cuts. Here are five potential Social Security changes, along with how much of the budget shortfall each would address:
Increase Social Security taxes. Workers currently pay 6.2% of their earnings into the Social Security system up to $113,700 in 2013. If that tax rate was gradually increased to 7.2% by 2036, doing so would eliminate just over half (53%) of Social Security's projected deficit. And if workers and employers each paid 7.6%, it would eliminate the financing gap altogether. Some 69% of Americans support raising their own Social Security taxes by 1%, according to a recent online survey of 2,000 Americans ages 21 and older conducted by the National Academy of Social Insurance (NASI) and Mathew Greenwald and Associates.
Lift the payroll tax cap. For 2013, workers pay Social Security taxes on up to $113,700 of earned income. Individuals who earn more than that don't pay Social Security taxes on the additional income. If this tax cap was gradually eliminated from 2013 to 2022, it would reduce the deficit by 71%. And if the tax cap were increased over five years to include 90% of all earnings (currently about 84% of earnings are covered), it would reduce the financing gap by 30%. This change would affect the 5% of workers whose earnings exceed the cap, and they would receive somewhat higher benefits when they retire. Lifting the payroll tax cap is a popular idea, with 68% of Americans supporting the complete elimination of the cap, NASI found.
Raise the retirement age. The age at which retired workers can collect full Social Security benefits is currently scheduled to increase to 67 for those who were born in 1960 or later. If the full retirement age was further increased to 68 by 2028 it would reduce benefits by about 7% and eliminate 15% of Social Security's funding shortfall. Increasing the full retirement age to 70 by 2050 would reduce benefits by about 21% and the deficit by a quarter. Raising the retirement age is an unpopular idea, with only about a third (37%) of Americans supporting raising the retirement age to 68 and just over a quarter (28%) in favor of increasing the full retirement age to 70.
Means-test benefits. Another potential Social Security change is to reduce or eliminate Social Security benefits for people who have retirement incomes above a certain threshold. For example, if benefits were phased out for retirees with non-Social Security income from $55,000 to $110,000, the deficit would be reduced by 20%. NASI found that 31% of Americans say they would like to means-test Social Security eligibility.
Change the cost-of-living adjustment. Social Security benefits are adjusted for inflation each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. If an alternative measure of inflation, the chained CPI-W, were used, that would decrease the annual cost-of-living adjustment by an average of about 0.3 percentage points and reduce Social Security's deficit by 20%. Using chained CPI-W would increase a $1,000 monthly benefit by $27 instead of the $30 boost retirees would get using the current measure. Just under a third (30%) of Americans are in favor of changing this cost-of-living adjustment.
More from U.S. News & World Report:
VIDEO ON MSN MONEY
Remove the fund from the general account so politicians can't raid it again.
Make politicians put back what they took out.
THE ONLY WAY TO FIX IT, IS THAT THE A-HOLES THAT TOOK THE MONEY TO BENEFIT THEMSELVES PUT IT BACK WITH INTEREST.
PUT ALL FEDERAL PENSION MONEY INTO SOCIAL SECURITY FUND, AND ALL POLITICIANS BENEFITS AND RETIREMENT FUNDS GO INTO SOCIAL SECURITY.
WHY THE HELL SHOULD SOCIAL SECURITY BE COMPROMISED.
POLITICIANS NEED TO GET WITH REALITY, WHAT MAKES THEM OR FEDERAL WORKERS BE TREATED BETTER THAN EVERYONE ELSE?
THE TIME HAS COME FOR TERM LIMITS AND WHAT POLITICIANS SHOULD RECEIVE IN COMPENSATION.
So, am I to understand, that the deficit, caused by the Federal Government borrowing from
Social Security's trust fund, is never going to be REPAID? Instead, they are talking about US
paying off their debt, by raising the SS Tax by 1.6 %? How convenient, that they don't discuss
how much they have pillaged this account.
They must think we are all brain dead! Read the law, below:
* When Social Security's sources of income exceed its expenses, the resultant surpluses must be loaned to the general fund of the U.S. Treasury. By law, the Treasury must pay this money back to the Social Security program with interest.
* This $2.7 trillion debt that the Treasury owes to Social Security amounts to $8,734 for every person living in the U.S. or $23,046 for every household in the U.S. (Facts about the ability of the Treasury to service this debt are detailed below in the section entitled
If you want to read the entire article, just go to:
Then, ask yourself, if we can afford to send Foreign Aid, to Syria, fund stupid programs, that get us nowhere (such as the Solar Energy we gave away money to, and they went bankrupt, and we will never see that money again. Can we afford to continue giving BIG OIL subsidies? Farmers?
Unless we pester the daylights, out of our elected officials to reign in these tax breaks, STOP sending our money to Dictators, who never give it to their citizens, and unless we DEMAND that the Government re-pay the $2.7 Trillion dollars they have borrowed from this trust fund, we will end up repaying their debt and allowing them to walk away with $2.7 Trillion dollars of our Social Security, and when they have pillaged that, the next thing they will go after will be your 401K. Are you going to sit around and be afraid to complain? I already have, and unless we ALL let them know we are not dummies, this will continue. It's YOUR Social Security, and if you lose it, you have no one to blame but yourselves.
How about we use Social security for what it was intended for .( Supplement retirement income)
Not all the things that it is being used for. I would bet we would have plenty money for everyone without raising the rate or taking away my money that I have paid in for the last 40 years.
The best way of all is to get it out of the hands of the federal government!!!!! Bunch of thieves!!!!
I don’t agree with Means testing for SSN benefits. If a person pays into SSN for all their working lives no matter how much money they have either through saving, investing or pensions, if you earned it you get. I retired early and have not taken SSN benefits yet. I’ve calculated that when I start receiving SSN I will be paying income taxes on 85% of my SSN benefits. If Warren Buffet or Mitt Romney qualified for SSN and applied for it they should receive it because they’ve paid into it.
Raise the cap if needed. I hear it holds 2.7 trillion dollars in treasury bonds and is actually doing quite well. I say end the political careers of politicians proposing cuts or age raises. Remember their names and make plans to vote them out next election
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