Social Security Reform and Its Many Options - psca.org
Most folks are keenly aware of the steadily eroding financial picture for Social Security. In fact, the media chatter about the benefit cut that could be expected absent congressional attention is causing alarm among both current and future beneficiaries. So much so that the claiming of benefits prior to full maximum monthly benefit age appears to be spiking as a result of the “get it while it’s there” chant.
Unfortunately, this trend could lead to long-term problems for many filers. Claiming in advance of full retirement age not only results in a substantial reduction in monthly benefit amounts, it’s a reduction that would be compounded if Social Security insolvency were to occur (which we believe is unlikely). Rest assured that many organizations and congressional sources are aware of the problem and are working toward a solution. Additionally, numerous recommendations have been developed and reviewed by the Social Security Chief Actuary’s office. These proposals address a broad spectrum of Social Security’s complex structure, and Paul Mulholland of the Plan Sponsor Council of America (PSCA) has examined many of them. A post on psca.org, which can be accessed in full here, recaps many of the recommendations and assesses their impact on the program’s financial future.
As an example of the leading thoughts on reforming Social Security for the long haul, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized to meet the demands of 21st-century economics. AMAC’s position is that this can be achieved without payroll tax increases through relatively slight program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating payments to higher-income beneficiaries. Changes to the age for maximizing benefits are included in AMAC’s position, along with (1) an increase in the thresholds where benefits are subject to income tax; (2) indexing of these thresholds annually to account for inflation; (3) improved survivor benefits, (4) eliminating the reduction in benefits for those choosing to work before full retirement age; and (5) improved savings tools for future retirees, including a savings account that builds estate value. AMAC is resolute in its mission to preserve Social Security for current and future generations and has garnered the attention of lawmakers in D.C., meeting with numerous congressional offices and staff over the past decade. To learn more about AMAC’s plans, click here.