"This all adds to the urgency of overhauling both the private and public pension systems to encourage later retirement, by shifting benefits to favor later retirement and reducing tax penalties on earnings for those who are already collecting Social Security. The payoff: a more solvent pension system and a more productive economy."
EDIT:
TL;DR Removing the cap at ~$118K/year on social security taxes (any income above that is not taxed for SS purposes) causes Social Security to become immediately solvent in perpetuity.
But heh, the highway trust fund is broke too [1], so why would I expect Congress to fix anything else related to tax collection for public services.
[1] https://www.transportation.gov/highway-trust-fund-ticker
And it would push the top marginal tax rates to ~55-60% (40+15+state).
Or should we continue to allow the top income tiers to siphon from the economy while everyone else is slowly lowered into poverty?
http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
I'm not necessarily arguing against raising taxes, I'm pointing out that it would be a huge change in the program.
I also probably wouldn't aim a massively scoped wealth transfer program at enabling earlier retirement (admittedly you haven't stated a preference for this wealth transfer over other sorts of wealth transfer, you've just stated that it would make SS solvent).
It appears so; you're looking back 100 years. I'm looking back in modern times (which I'd consider starting around World War 1).
> I also probably wouldn't aim a massively scoped wealth transfer program at enabling earlier retirement (admittedly you haven't stated a preference for this wealth transfer over other sorts of wealth transfer, you've just stated that it would make SS solvent).
62 is considered the earliest you can collect social security, with a steep reduction in benefits for the remainder of the collection period. 65 is standard. I don't consider 65 early retirement.
If you have a better idea than removing the SS tax cap, I'd love to hear it. Reducing benefits are not an option when existing benefits are barely keeping seniors out of poverty as it is.
As far as early retirement or not, it's another squabble over definitions. 50 years ago, the idea of social security was that people who survived into old age would have some reliable income. So when you propose ignoring that what it means to survive into old age has changed over time and propose using wealth transfers, you aren't just talking about making social security solvent, you are talking about fundamentally changing it.
There's nothing wrong with proposing such a change! But I think it makes sense to point out what a significant change it would be.
As I understand it, the entire thing would only have stayed solvent if each successive generation contributed significantly more than the previous one, presumably due to population growth and economic growth.
I may be wrong, just the understanding I've developed from previous discussions.
https://www.ssa.gov/oact/NOTES/as120/LifeTables_Body.html
The number of people living to 65 has increased and they live longer after reaching that age.
Take a made up scenario: Say you plan on being able to pay 10 people for 10 years. Something like adding 1 person and 1 year smashes your budget (100->121).
I can't speak to the majority of pensions funds, but there are State funds that assume 8.5% returns while having 50-60% of the fund in bonds. Those are the Minnesota numbers, and they tend to be pretty good for a State. They're ~75% funded, and that makes them 19th best in the country. If you face the reality that their assumptions are insane, then you have the wrestle with more realistic projections of how much they've really funded.