This Sunday’s Weekend Journal has an article on other possible mechanisms for Social Security reform.
Selected items:
- The private accounts provision currently being discussed is projected to drive a $2 trillion funding shortfall over the first 10 years, presumably to be covered by increased government borrowing. (Great, just what we need, a bigger national debt.)
- Raising FICA taxes by 2 points (from 6.2+6.2% to 7.2+7.2%) would eliminate the current projected midcentury funding shortfall, at least within the next 75 years.
- Replacing the wage growth factor in the initial benefit calculation with a pure inflation index would also eliminate the projected shortfall, through reduced benefits.
- Raising the income cap on Social Security withholding would eliminate 43% of the projected shortfall.
- Increasing the retirement age gradually to 70, from 67, by 2083 would eliminate 38% of the projected shortfall.
- Basing initial benefits on the worker’s 38 highest-paid years instead of 35 years would eliminate 16% of the projected shortfall.
- Investing 15% of Social Security funds in market index funds would eliminate 15% of the projected shortfall.