Social Security was created as a pay-as-you-go system that was supposed to last forever. But it’s not going to make it past the mid-2030s. We take a look at several things that could change in the aftermath.
You Could Work longer
Among the numerous ideas being proposed to fix Social Security, working longer remains the most popular. Gov. Chris Christie of New Jersey and U.S. Sen. Marco Rubio of Florida have been strong proponents of increasing the age of retirement to 69. They say this would offset the funding shortfall by as much as 25% over the course of 75 years, something that the Social Security Administration also concurs.
When Social Security was last revamped, back in 1983, the retirement ages were reset, too. Those born after 1960 had to wait until 67 to claim retirement benefits. In addition, those born between 1954 and 1959 could claim retirement benefits at age 66.
You Could Get less
A long debated topic is that of simply getting less than what you pay in. It’s something that former Florida Gov. Jeb Bush as well as Lindsey Graham of South Carolina have both suggested. It’s also been toyed with not giving wealthy people any rights to Social Security or simply giving them less.
The difference is that you get what you pay in right now, but in the future you could get less if you are earning more than most other people. The average pay-in is 6.2%, capped at an income ceiling of $118,500. But newer laws could force higher pay-ins for wealthy persons, helping to offset the costs.
Update Cost of Living
Cost of living has usually been based upon the Labor Department’s Consumer Price Index. But this metric could be updated instead. U.S. Sen. Ted Cruz of Texas has suggested that we instead use chain-weighted CPI. This is a different method that purports that consumers spend less when inflation is high. This could result in a lower annual adjustment to offset inflation, thus helping to preserve the program.
Increase Income Taxes
The most broadly suggested method for fixing Social security is to just increase income taxes. But it’s a method that nobody really approves of. Given that most people already are paying in about 6% of their income to Social Security, the general consensus is that it shouldn’t be broken to begin with.
What are your thoughts? What can we do to fix Social Security? Let us know in your comments.