Wednesday, May 19, 2010
Social Security reform
A government report was just released with options to save social security. Fixing social security is not that hard the answer has been there for years. It's just that no one has the courage to do it. Social security was created to provide for the working person in their old age. However, it was thought that the wealthy would never take it which is why the tax has always had an income cutoff. The poor and middle class pay on 100% of what they earn. It turns out that we have nearly 100% of people collecting whether they need it or not. This has caused some to believe that we should tax every dollar earned which amazingly enough will solve the problem. But, will it? Chances are compensation for the high salaried will change so that the employer is not paying millions for their high salaried employees in social security. A better solution is to look at retirement age. When social security was created the average life expectancy was 62, yet they made the age of retirement 65. So, many people never collected. Today the average life expectancy is 78 so most people collect something. We could move the age to 81 and tie the age of retirement to the average life expectancy. We could also means test the people receiving the benefit. And finally increase the tax a percent or 2. Will this happen? No way, but it is nice to think about.