We have a myriad of problems facing our country such as unemployment, healthcare cost, the deficit, etc. Washington politicians certainly aren’t winning any popularity contest these days and could do a lot in repairing their image by stepping out of the partisanship arena and claim victory by fixing a problem that can be fixed.
Social Security projections have us being able to fund the current level of benefits until the year 2031 after which time only about 75% of benefits would be covered. There have been many suggestions to fixing the pending problem, including a list of ten in the June 12 AARP Bulletin:
- Increase the cap
- Raise the payroll tax rate
- Consider women’s work pattern
- Adjust benefits
- Set a minimum benefit
- Modify the COLA formula
- Raise the full retirement age
- Give the oldest a boost
- Establish private accounts
- Cover more workers
Let’s look at two of these a little closer:
Increase the cap
People are required to make payroll tax contributions to Social Security on the first $110,100 (for 2012) they make. Moving the cap up to $215,400 would reduce the pending shortfall by 36%
Raise the full retirement age
Social Security taxes were first collected in 1937. For individuals born between 1939 and 1941 the life expectancy was 63.6 years. Today life expectancy is 78.6 years yet the full retirement age for Social Security has only increased from 65 to 67 (depending on when you were born) over the years. Increasing the full retirement age to 68 could reduce the shortfall by 18%.
Fixing what has historically been one of the government’s most successful programs can be done. Doing so sooner will alleviate some tougher choices done the road. All this takes is some political will, and yes, compromise.