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How would you fix Social Security?

The two obvious choices are to trim benefits and/or increase taxes, but there are still tough decisions to make.

By doubleace Apr 14, 2011 9:31AM

This post comes from Lynn Mucken at MSN Money.


As deficit-cutting fever -- or at least brave talk about it by politicians -- rolls across the nation, one of the top targets of conservatives is Social Security.


Given all the political windage, you might be surprised to learn there is a $2.6 trillion surplus in the SS trust fund. However, with a huge increase in beneficiaries looming as the 1946-to-'64-born baby boomer generation passes through, coupled with a proportional decrease in the working population, the fund is expected to run dry in 2037 and then operate at a deficit for decades longer. Post continues after video.

In his speech this week on the budget deficit, President Obama did not give specifics for addressing that problem, but said "… both parties should work together now to strengthen Social Security for future generations. But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market."

Just how are Congress and the White House going to do that? We want to hear your suggestions. 


Using information from Boston College's Center for Retirement ResearchThe Wall Street Journal has laid out 11 changes that could help keep Social Security solvent over the next 75 years. Six of them would change the benefit structure, five would alter the revenue stream. You can riff off them, or give us ideas of your own.


First, some numbers provided by the WSJ and the Social Security Administration:

  •  2.9/2.1: Workers for each SS beneficiary today and in 2035.
  •  40.7/76.3: Number of Americans, in millions, over 65 today and in 2035.
  •  $1,011/$1,312: Today's average monthly benefit for women and men.
  •  34 million/$703 billion: Number of Americans receiving SS, and the payout in 2010.
  •  52/72: Percentage of retired couples and singles who receive more than 50% of their income from SS.
  •  20/41: Percentage who receive more than 90% of their income from SS.

OK, here are Boston College's ideas, and the percentage of the 75-year shortfall each would cover. Feel free to mix and match.

  • Cut benefits today by 13% (100%) -- This means the average couple's SS income would drop from $2,323 a month to $2,021. That $302 pays a lot of utility and grocery bills (or greens fees and slot machine play). This is quick and clean, and probably politically fatal for anyone who votes for it. The SS recipients might find it more palatable if the military, federal workers and even members of Congress took the same hit.
  • Raise the full retirement age quickly, then in line with longevity (30%): Americans are living longer, and longer in good health. The SS age for full retirement is gradually increasing from the current 66 for those born between 1943 and 1954 to 67 for people born in 1960 or later. A bipartisan committee of retired senators recommended increasing that age to 68 and then to 69 by about 2075. The age for early retirement also would rise from 62 to 64 during the same period.
  • Freeze the purchasing power of benefits (100%): SS benefit increases are designed to replace a portion of our earnings, thus helping maintain our standard of living. According to the Boston College figures, if such a freeze had been implemented 30 years ago, today's SS benefits would be 18% smaller.
  • Freeze the purchasing power of benefits on a sliding scale (65%): The same as above, but the bottom 30% of the income bracket would continue to replace earnings, and there would be a sliding scale above that. This appears to be means testing by another name. 
  • Change the cost-of-living adjustment (25%): Writing on USA Today's Planning to Retire blog, Emily Brandon said that reducing the cost-of-living adjustment by 1 percentage point every year would eliminate 78% of the deficit (40% for half a percentage point). The annual COLA is based on the Consumer Price Index for urban wage earners, and includes food and energy prices.
  • Cut benefits in 2037 by 22% (100%): According to Boston College: "The average worker who claims at 65 would get 28% of earnings -- about $11,700 in terms of current wages -- before reductions for Medicare premiums and income taxes. And if we shelter existing beneficiaries, new beneficiaries would get much less." This appears to be a way to punish the current child-producing generation for not having enough kids, but few politicians look 26 years into the future, and this might not cost them their job. And, of course, the "Me Generation" boomers might go for it.
  • Increase the payroll tax today (100%): Both employer and employee would put in 7.2% instead of 6.2% on earnings up to $106,800 (sorry, that employee drop to 4.2% negotiated in Congress in December is good only for 2011). If your household is at the median of $67,000, you would pay $670 more a year, or about $13 a week. That just might sell. 
  • Raise the payroll tax earnings cap to cover 90% of earnings (40%): According to the Boston College figures, the SS payroll tax covers 83% of all earnings. To get that figure up to 90%, the individual earnings level subject to the tax would rise to $172,000. The well-to-do and companies, both powerful forces in politics, are likely to fight this.
  • Use the estate tax (25%): The idea is to take the 35% tax on estates worth over $5 million and dedicate it for Social Security. Given the nation's overall budget deficit, this has a "smoke and mirrors" feel. Are you any richer if you switch your wallet from your left pocket to your right?
  • Invest 40% of SS Trust Fund assets in stocks (35%): The $2.6 trillion in the trust fund is now invested in bonds sold to it by the government (yes, we borrow the money from ourselves). Those optimistic Boston College folks think the stock market would yield a 3.5% higher annual return. This seems unlikely to fly, as President George W. Bush learned when he tried to privatize Social Security in 2005.
  • Increase the payroll tax in 2037 (100%): Boston College estimated the payroll tax would be 8.2% for both employee and employer, but that seems a trifle optimistic. Still, this might be adopted; the average age for members of Congress is 58, so all but a few would be long gone (from office, at least) when the political backlash hits.

More on MSN Money:

Apr 14, 2011 3:31PM

The answer is simple.....if one has not paid into the system, then one gets NOTHING out of the system.



Apr 15, 2011 9:45AM
1. Put SSI back where it was before President Johnson, he had it placed in the general fund to make his budget look good when he was in office. 
2. Do away with the Jimmy Carter law that allows anyone over 65 to draw SSI whether they paid in or not. (this alone would save millions, I know many people who never paid a dime in and is getting 600+ each month)
3. No one while in the prison system would be allowed to drew a dime of SSI. We are already paying for their upkeep.
4. Must be citizen of the US and paid in to the SSI program. 
5. Not sure if welfare is paid for from the SSI program or not.  But as stated before and seen on TV where women stay home a have children from multiple partners and get paid more every time they have another.  Limit it to only one child and the father must pay support and the mother must have a job of some sort in order  to draw a dime.
5. Any benefits from state or federal government (welfare, food cards etc.) must be citizens. I have seen illegals in the grocery line with food cards and pull out 100 dollar bills to pay the difference.  Also, go to a place that has a  Western Union  terminal and watch how many illegals will send money (tax free) to the family's out side of this country.  It has been stated on the news that over 8 billions dollars are sent each year out of this country tax free and NO SSI paid...

I will stop for now

Apr 15, 2011 9:46PM
Eliminate people that have not paid in to SS.  Retrieve excess from past years from "General Fund" and make SS seperate again.  Eliminate welfare and any other parasites from SS.
Apr 15, 2011 4:05PM
Social Security was created for SENIORS! Seniors pay into the system but the government raids it to give to special interest groups who will vote them back into office.
They give SS to illegal aliens
They give SS to handicapped people
They give SS to anyone the government wants to and then blame too many seniors for the demise of SS.
Seniors pay a yearly stipend for Medicare plus they pay for the amount over what Medicare allows docs and medical facilities. 
Seniors die so there should be lots of money since our population has grown. But the problem is that the growing population is made up of non-working, dependents with lots of kids.  FIX THAT!
No money for unwed mothers. That is the function of charities, not governments. Illegitimacy is a sin in my religion. Why do I have to contribute to it? Let the bleeding hearts give their money to unwed moms so they can keep spitting the little money-makers out.

Apr 14, 2011 3:37PM

Everyone in Washington should have to pay into SS . Once The people who make all the decisions in Washington have to pay & live like the rest of us , Things will change extremely fast .

Apr 15, 2011 5:23PM
The obvious solution that is not being discussed is that Social Security should never have been used and expanded to provide for more than it was originally intended.
Apr 14, 2011 3:27PM
If we want to fix Social Security and Medicare all we need to do is put those Congress and Senators  in Washington under the programs and that will get it fixed real fast.  Why should they be exempt anyway?   It is all to easy to omit yourself from the laws you impose on this country.  Same for any laws or bills they put into place if it is good enough for us it should be good enough for them to do it too. Cutting their salaries are another way to save money who voted themselves a raise anyway. 
Apr 14, 2011 4:34PM
It's funny how the government never thinks of cutting things like welfare where lazy people, most who have never worked a day in their lives, get a ton of free stuff but they always want to cut programs on people who have worked years, some most of their lives, or raise taxes on people who bust their butts. Where are the priorities in this country? Why are lazy people allowed to mooch off of the others just because they have a kid, especially considering the rest of the people who have kids work every day? These people pop out kid after kid, but can't work. They have so many kids so they can remain on the system, the system that was created to help working people get back on their feet if laid off, not as a way of life for bums. If forced to support themselves, they would. They don't now because they have a choice. All welfare does is keep people lazy and brings tons of kids into poverty. This is what the government needs to be looking at cutting. Another thing is SSI. I have seen young people in their 20s and 30s collecting SSI for reasons like they are drug addicts or they have anger issues. First of all, why should others be forced to support people so they can sit around and get high all day and second, medical problems should be serious and proven before these people are allowed to collect anything. America needs to get their priorities in order and we need to stop babying the lazy.
Apr 15, 2011 3:44PM

How about this for a start.  Investigate overseas direct deposit.  Many americans died in places like Thailand only to have several generations of Thai's  at the bank living off Uncle Sam, or should I say our hard earned money.  Make Americans go to the Embassy every year to prove they are alive, and that they don't have a fake wife, than a daughter who is still collecting.

Thailand is just one of many countries that have been doing this for years.  Back in the 70's 80's and probably now they change names to the american there with a cost of like $20.00, add them to the account, and the man has been dead for 20 years... first the young wife collects it, and if she has any kids go up to the bank every on and so on...."This has to stop!!!!

Apr 14, 2011 4:37PM
How about doing some investigating on the lazy dirtbags who collect just because they don't want to work and have scammed the system. We SHOULD be supporting seniors that have worked all their lives and paid into SSI. We SHOULD support the infirm who are unable to work because of DOCUMENTED catastrophic illness but we SHOULD NOT be supporting lazy bums and there are plenty of them out there collecting on SSI! People should start reporting these jerks and I'm sure there would be a nice surplus when they cleaned house.
Apr 15, 2011 3:47PM
Apr 14, 2011 4:34PM
How about having the government pay back what they have stolen!
Apr 14, 2011 3:20PM
if you didn't put money in you don't get any out
Apr 14, 2011 2:59PM
I say we stop paying in to it and save our own damn money. Bunch of thievin bastards. 
Apr 15, 2011 8:43AM
Do away with the FICA Alternative plan legislated in 1999 in the IRS Omnibus Act.  It allows certain government entities mostly universities and school boards to call many employees temporary and not pay any social security taxes on them.  The employees are required to pay in to a 401K plan at the rate of 7.5% of their salary but the employer does not match it.   The employers are saving billions of dollars while these employees are not gaining any quarters toward social security earnings.  If these employees were truly temporary it might be just but many have worked at these jobs for years.  T.hese billions of dollars are being kept from the social security trust fund.  This is a scam that needs to end now.
Apr 14, 2011 4:33PM
I'm so sick and tired of hearing that the obvious solutions to the massive problems this government, through incompetence and corruption, has inflicted on the citizens of our country is for the people who need help the most to suffer even more and do without services that should be untouchable, especially in a country that's supposedly a wealthy as we claim to be. What really needs to be done is for the government to pay back the $2.6 trillion they stole from the Social Security program to pay for the senseless, endless wars we're involved in and the absurd amounts of foreign subsidies we throw away annually. The government should not be able to steal resources allocated to critical social programs. The government needs to generate meaningful jobs for unemployed people, instead of the poverty level service jobs they claim are driving the recovery process. If these two things happened, Social Security would be completely solvent and in good shape for the unforeseeable future. We need to start taking care of ourselves instead of throwing money around the planet accommodating the ambitions of corporate America. We also need to require the richest 1-2% of the population and corporate America to start paying the same percentage of taxes we all pay in order to finance the well-being of our country. This government is supposed to be representing us and doing things that benefit our quality of life, something that is not even part of the equation as they keep passing insane, destructive legislation.
Apr 14, 2011 3:27PM
The solution is really quite simple!
At the present time income above about $108,000 is exempt from SSN taxes.
Social Security could be balanced simply by taxing ALL income with SSN payments.
The way to satisfy those rich folks this would affect:
Those folks would then be eligible for their corresponding larger share when they retire.
The numbers still work and everyone gets payments that they deserve.

Simple and fair for everyone!

Apr 14, 2011 3:26PM
Well now Proud Gen Xer.....................Have you ever heard the saying:  "Where you stand depends on where you sit"?  I'm quite sure you would sing a different tune if you were a boomer and had paid into SS all of your life.  Oh, and please don't stop working.  Us boomers need your money (actually ours).  Also, if anyone really believes there is 2.6 trillion in the trust fund, I hate to burst your bubble, but the only thing in the trust fund are useless IOU's.  One last parting shot:  Every time the SS law has been changed from FDR's original concept, things have gotten worse (you know, SS benefits taxed, money going out the back door for other programs, involuntary participation and on and on and on).  Guess which party has been in control and pushed these changes through every single time?  That's right folks, DEMOCRATS!  And they have the nerve to accuse the Republicans of tryng to destroy SS.  The DEMOCRATS have already destroyed it!!!!!
Apr 14, 2011 4:18PM

Rediculous...thats OUR money, the program was originally put in place to supply retired americans with income. The federal government has robbed it time and again, now they want to cut it because they dont know how to ballance the effin budget and curb their own spending habits?????!!!!!!!! Keep your rotten hands off our money, take yourselves a paycut and get on with the job your being paid to do - rediculous rediculous.


Im amazed at how disapointed I am with our government and how they continually try and find ways of robbing the american public as opposed to turning their examining eye on themselves....Shame on washigton, shame on Obama, and shame on me...for staying in this back assward country for tooo long.

Apr 18, 2011 2:31PM
Take the congres private pension fund and put it into social security.  Congress members can then draw ss instead of their tax funded private pension.  Hmmmm;  I wonder how fast they would quit stealing money from ss for other things if their future income depended on it.
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