Monday, January 19, 2009

Social Security and Budget Deficit

Social Security is projected to go into deficit within the next decade. This would be devastating to the US Federal Budget, which already draws a $1 trillion annual deficit.

Solution: Increase the Social Security retirement age and create a better sliding retirement age. Reduce Social Security benefits and reduce the lowest-bracket income tax for seniors over the retirement age.

Current Social Security regulations, according to Wikipedia, are as follows: Those born before 1938 have a normal retirement age of 65. Normal retirement age increases by two months for each ensuing year of birth until the 1943 year of birth, when it stays at age 66 years until the year of birth 1955. Thereafter the normal retirement age increases again by two months for each year ending in the 1960 year of birth, when normal retirement age stops at age 67 for all born thereafter.

These ages were settled upon 30 to 40 years ago. People are healthier for longer. Increasing the baseline 2009 retirement age, and then making it increase by 1-2 months per year (for everybody) ensures that Social Security can remain solvent, while acknowledging trends in lifespans.

An additional method of preserving Social Security would be to reduce benefits slightly, but decrease income tax in the lowest tax bracket for seniors over the social security retirement age. Functionally, then, a senior who works only a few hours a week at a job, no matter how low-paying, would see functionally the same social security payout, before counting income from a few hours of work. This increases economic productivity, reduces boredom by seniors (which has been linked in some studies to senior health problems, another issue) and keeps Social Security solvent.

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