How would you fix Social Security?

Question

It's a flat tax system with a salary cap. It was never intended to pad the wealth of the rich and it expected priority to go to the poor & middle class first.

A few changes to the system should insure it's solvency.

1) Remove the flat tax & salary caps. If you earn over 100K you should pay based on a graduated tax scale. All of your earnings would be subjected to social security tax.

2) You are only eligible for SS benefits if after deductions your taxable income is < $200K. If you die before drawing from your SS pot it will be added to your beneficiary's pot or donating to the institution of your choice.

3) Similar to 401K vesting % you will be able to invest a portion of your SS pot each year in low risk investments suitable for 401Ks. You will be able to invest all of your SS pot within 10 yrs of the standard penalty-free retirement age.

It's grossly unfair to push out the retirement date for the people who need the benefits. Abandon that idea altogether.

3) An example might help.

Say you start paying in at 24.

I would like to establish a firm rule that retirement age be no less than 15 yrs from avg life expectancy age. That's currently 79 so that makes retirement age 64.

By age 54 you would be allowed to fully invest your SS pot. Over those 30 yrs you no doubt have been managing both your 401K & as much as you could of your SS pot.

I think it's just natural for people to manage their SS pot as closely as they do their 401K when given the opportunity to do so.

Answer 1

I would oppose changing the tax rate based on income.

I would remove the cap on what income the taxes applied to and keep the cap on the formula for calculating benefits.

I would change the indexing formula. By way of explanation, the current law adjust your earnings from previous years by using the increase in GDP rather than inflation. I would keep GDP for indexing up to a certain level (say the equivalent of $60,000.00 in current income). I would use inflation to index income above that level (with the level itself to be indexed for inflation). This would lower the benefit paid to the top recipients while keeping the same benefit for the working class.

I would not go with number two. I think it is fair to tax a certain percentage of benefits to recognize that most of a social security benefit represents previously untaxed income. However, the political support for the system is based on everyone getting benefits.

Likewise on the second part of two and number three, I am reluctant to use current receipts to fund these options. I would not object to a Social Security plus that allowed people to allocate a small percentage of their income tax to such a fund which would then translate somehow into the benefit formula. Long-term economic factors do not make 401(k) plans look particular good as retirement planning devices especially if weighted toward domestic stocks. Social Security has served as a useful "floor" on income for retirees. The system should not be changed in a way that removes that floor.

Finally, I think there needs to be some adjustment to the retirment age to reflect longer life expectancy. The funding formula was never intended to work with large numbers of people living 25 years or more after retirement.

Answer 2

Here is one objection: By removing the cap on taxes to your wages (now at $97,000 I think) you are screwing the higher wage earners even more. I think that a little research will show that someone who makes $80,000 per year does not get twice the social security benefits as someone who makes $40,000 per year, even though they pay in twice as much. Now you want to make that even worse. Is that the American way?

Answer 3

What's interesting is we can always find trillions of dollars for a foreign war based on bad intelligence, pledge billions of dollars to rebuild that country, spend billions on a "drug war" with nothing to show for it, and on and on.

But when we try to talk rationally about taking care of American citizens, the neo-cons start whining about welfare and social programs and how they don't want their tax money going to these programs.

What an odd priority to choose.

Answer 4

right this is the thank you to do restoration it and help our environment on the comparable time. start up 401-ok bills beginning at beginning. We already comprehend that interest bearing bills paintings suited alongside with the ingredient to time. And who has extra time than a splash one? shall we require mothers and fathers to make contributions 3 p.c. of their earnings in the direction of each and each of their youngster's 401-ok. we will call those bills Spring Board bills because of the fact a p.c. of it could additionally be used for college and yet another p.c. for a down charge on the youngster's first abode. After that its in elementary terms a race to retirement. perhaps, Grandparents besides as all of us else could desire to be allowed to make contributions to a infant's Spring Board account too. With this methodology of changing social protection (as though there's a topic) mothers and fathers will could be careful as to what share infants they have. this could help save the inhabitants down and our government won't could trouble approximately its getting older inhabitants ever returned.

Answer 5

That sounds good except for # 3. Who would make you invest?

Answer 6

it should be privatized, the government have been stealing the money for other social programs for years

Answer 7

I would vote for you.....