From an article in Money Watch:
According to a recent analysis by the Pew Research Center, the gap in wealth between Americans over age 65 and under age 35 has widened considerably since the 1980s; the median wealth of this older American age group is now 47 times the median household wealth of the younger group, up from a ratio of just 10 to 1 in 1984.
What was that you said AARP, “don’t touch my Social Security or Medicare!”
Nobody is going to cut anyone’s benefits, but they must change what happens in the future. Here are ideas to save tons of money with virtually no one being harmed.
First, adjust the COLA as has been suggested to a chained inflation calculation starting in 2012. [no benefits are cut, however they may rise slightly less than under today's formula and I do mean slightly.]
Second, beginning in 2025 new Social Security beneficiaries do not receive a COLA during the first five years following the start of benefits with a possible exception of some kind for those receiving disability before age 65. [there would be time for people to save and plan for this period of fixed income]
Third, effective 2025 anyone receiving the maximum Social Security benefit at the time they begin benefits (highest income group) will be eligible for a COLA every other year during their retirement with no catchup for skipped years. [This is both fair and realistic]
Even though these ideas do not save cash immediately, they greatly reduce future liabilities thereby extending the period of solvency without additional revenue.
Remember, at one point incoming taxes were more than sufficient to pay benefits with the surplus buying Treasury bonds. Today incoming taxes are not sufficient to pay benefits and interest on the previously purchased bonds must be used. Unless we do something down the road, the bonds will have to be redeemed to pay benefits and finally when there are no bonds to pay interest or redeem, incoming payroll taxes will be sufficient to pay only a portion of promised benefits.
Why wouldn’t we want to fix this now?
Perhaps seniors giving up a little they never had in their pockets will leave a little in the pockets of the Americans hoping to be seniors some day.
P. S. Those interest payments on the bonds held in the Social Security Trust and the cash to redeem those bonds comes out of another area of the federal budget and contribute to the deficit. As I have noted before, the money given to Treasury by the Social Security Trust (your payroll taxes) to purchase bonds has already been spent by the government. The money to pay interest on the bonds comes from … well, thin air and wishful thinking … Feel like Greek or Italian takeout tonight?
Pass this along to AARP and you Congressman and Senator
- Cutting Medicare and Social Security benefits: senior citizens do not have a right to special treatment. AARP is doing America a great disservice. (quinnscommentary.com)
- Social Security payroll tax cut for 2012 is a risky bet and not all it appears to be (quinnscommentary.com)
- How Conservatives Exploit the Myth of “Wealthy Elderly” to Justify Gutting Social Security (alternet.org)
Tags: Cost of Living Allowance, Economic inequality, federal budget, Social Security