October 12, 2011

JUST BECAUSE IT'S EASY TO FIX DOESN'T MEAN WE SHOULD DELAY:

Fixing Social Security (Jim Blankenship, 10/11/11, Forbes)
Means testing is one of the matters that must be addressed. As it relates to all forms of benefits, presently the only means test results in ordinary income tax on up to 85% of the benefits received. This doesn't go far enough - being a social insurance program, benefits are guaranteed to all eligible persons, including those who have no need for the funds in any way, such as the über-rich. I'd suggest that the means testing should go even farther than that, to include those not-so-über-rich, with incomes that far encompass the need for this additional social insurance. Another area to resolve problems with our current system is in the complexity of the way it works and how benefits are paid to people. There is a tremendous amount of bureaucracy involved with administering, responding to questions, and working through complaints with the way the system currently works. If the system were changed to force folks to only file for retirement benefits at Full Retirement Age (FRA) and not before or after, much of this complexity would be removed. Along with the removal of the complexity, much of the bureaucracy could be eliminated, reducing the overhead and costs, making the system more efficient. By setting one specific age for retirement benefits, we would also have much better control over outflows from the system, and adjusting FRA would have an immediate and calculable impact on the system. Granted, the impact on recipients would also be immediate under this proposal. Don't get me wrong, I'm not suggesting that this will fix everything. We'll have to get the actuaries involved to figure out how much of an impact these changes could have. The end result is probably going to be that current drags on the system will require further reduction in benefits than I've proposed and/or additional taxation in order to keep the benefits flowing. But taking a few steps right now can help to forestall the presently inevitable outcome.

Posted by at October 12, 2011 7:12 AM
  

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