Social Security was designed to provide a floor income. It was never intended to be the primary source of income. Nevertheless, human nature being what it is, many Americans never got the message and never will. That being the case Social Security is essential, it must be preserved and in doing so the basic principles of funding must be observed. It should not be turned into a welfare program, everyone, including employers, must have skin in the game throughout the their lives.
None of this is hard to do and if we get passed the rhetoric from both far right and far left, it can get done. Forget the political and even economic noise and do something.
Based on the 2015 Social Security Trustees report, the Trust can remain solvent for 75-years if we do just one thing; raise the payroll tax 2.62% (2.59% based on recently released 2016 Trustees report) shared equally by employer and employee. That equals $655 ($645 2016 report) a year for the average working American, less than they spend on lottery tickets, a couple of tattoos, a basic cup of Starbucks a day and far less than smoking. Every working American can afford this, especially given the future security the investment provides.
Forget all the gimmicks pitting seniors against the young, the middle class American against the “rich.” That’s political pandering.
Here is all we need to do:
1️⃣ Raise the payroll tax rate by 1.31% on employers and employees
2️⃣ For any employer with 250 or more employees that does not contribute toward a retirement plan for its workers, the employee portion of the additional rate is reduced by 1% and the employer’s share be increased by 1%
3️⃣ Required the tax rate to be adjusted upward or downward annually based on the Trustees report on a 75-year solvency requirement. That way the Trust will account for economic conditions, interest rates and any modifications (improvements) to Social Security.
4️⃣ Adjust the CPI benchmark to more accurately reflect spending by the over age 65 population
5️⃣ Provide that any individual beginning Social Security benefits at the maximum monthly rate shall not receive a COLA for the first five years of collecting benefits and only every other year thereafter. This on the basis that those at the highest income level for taxable wages should be able to provide substantial supplemental income.
All this would be a lot easier if politicians would tell the truth about Social Security and stop playing games with the program and if Americans would accept there is no free lunch and if they want to rely on Social Security, they must pay for it.
If the above changes were implemented, we would never have to have another discussion about Social Security because it would always be funded and solvent.