Howard Gleckman puts forward six ideas for Social Security reform.
- Create a respectable minimum benefit for low-income workers, increase some widows’ benefits, and create an additional benefit for the very old (say, 85 or older).
- Raise the retirement age, including the minimum benefit age of 62. An extra year of work would solve about one-third of the program’s funding problems. More and more of us can work into our 70s and a modern Social Security system should reflect that. It makes no sense for government to signal that we should stop working at 62 when we are likely to live for two more decades.
- Protect those who work physically demanding jobs. While the percentage of older Americans who do manual labor is shrinking, those who do this work need to be protected. Long overdue reforms in Social Security’s badly broken disability system would help.
- Increase contributions and reduce benefits for high-earners. Everybody would still get some benefit—Social Security is not welfare and must retain its status as social insurance. But there is no reason why it can’t be made more progressive.
- Preserve the defined benefit nature of Social Security. Adding an additional savings component is a good idea. But the public is not interested in taking on additional risk with their retirement.
- Be absolutely transparent about benefits and structural changes. Whatever Congress does, there should be no surprises. As it is, many young people have no confidence in Social Security. Reforms should restore their faith in this key piece of the old-age safety net. But government should also be clear that in the future Social Security will only supplement—and not replace– other retirement savings for middle- and upper-income retirees.
I believe there are two main benefits of acting sooner rather than later to address Social Security.
- Doing so now will expand the options available, making an increase in the minimum benefit (option 1) and protecting those workers in physically demanding jobs (Option 3) more likely. Such tweaks would at least partly address differences in lifespan gains across different income groups that are an issue with eligibility age increases.
- Since Social Security pays cash benefits that are indexed in one way or another to inflation, any fix agreed to should work as expected, and Social Security could truly be ‘off the table’. In this way it is very different from any health reform plan (Affordable Care Act or any other), whose savings will be more difficult to predict, and will require mid-course corrections and endless tinkering, simply because purchasing health care is more complicated than mailing checks.