How to fix Social Security - Page 2 - Boston.com: " . . . On the revenue side, we should hold tax rates steady, but gradually phase in a rise in the current $110,100 ceiling on wages subject to Social Security contributions. Until the 1990s, that ceiling reached roughly 90 percent of all wages. We should move back up to that 90 percent level by 2020 and then index the ceiling to future wage gains. . . . We could also enhance revenues by requiring all future state and local government employees to join the Social Security system, a reform that would also, over time, make local pension costs more manageable. On the benefits side, we should change the way we calculate the cost-of-living adjustment for all beneficiaries, by utilizing a revised Consumer Price Index which most economists agree more accurately reflects the rate of inflation for the expenses most seniors incur. . . Lastly, we should accelerate the rise in Social Security’s full-benefit retirement age from age 67 to 68 by 2030 and then index the full benefit age for future generations to gains in longevity. Life expectancy past age 65 has risen nearly 50 percent since 1940, when Social Security first began regular monthly payments. . . . Based on estimates included in the 2010 report of the Social Security system’s expert advisory board, these proposals could eliminate nearly all of Social Security’s funding shortfall over the next 75 years.
We should then back up a solvent Social Security system with as close to universal access to workplace-based private savings as possible. This requires preserving all existing tax deferrals for savings through 401(k)s, IRAs, and other retirement vehicles — then extending coverage to all working Americans by adopting a great, bipartisan idea — the payroll-deduction Automatic IRA. . .Creating a truly reliable public-private retirement system would do far more than just help restore Americans’ confidence in their personal futures. It would boost market confidence worldwide. It might also revive the American people’s belief that our two political parties can look past their differences — as we have — to find common ground for the country we love. Rebooting that shared faith might just be the greatest benefit of all.
James Roosevelt Jr. is president and CEO of Tufts Health Plan and former associate commissioner for retirement policy for the Social Security Administration. Robert L. Reynolds is president and CEO of Putnam Investments.
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