Friday, April 12, 2013


Some Opinions about Social Security

I am as worried as anyone about the fate of the American Social Security system.  It was enacted during the administration of Franklin Roosevelt, in 1936 by a Democratic controlled Congress.  There were some loopholes inserted to get the votes of the Southern Democrats, particularly the exemption of farm workers.  The Southerners didn't want to have black farm laborers receive the retirement benefits.  The constitution prevented the exclusion of "black" workers, so all farm workers were excluded.  That's a problem that existed eighty years ago.

One of the problems today, according to some critics, is that the program is going to cost more and more and eventually will use up 80 percent or more of the federal budget.  How do we modify the system so that it will be politically affordable?  There are several proposals:

  1. Change the formula for computing the annual cost of living adjustment.  Make the adjustment a little smaller.
  2. Change the cap on the payroll tax.  At the present time the cap is close to $120,000 a year.  Lift the cap entirely, or raise it to, say, $1,000,000 a year.  In that way the payroll tax would bring in more money, money needed to provide benefits to a growing segment of the population.
  3. Change the age of retirement.  It is now 65 years.  Some workers choose to continue working to some age past 70.  In my case, I retired at age 66.  My wife was past 70 when she retired.  The change should be gradual.  It could be changed one year at a time every five years or so up to perhaps 75.
None of these changes would affect me or other persons already living in retirement.  I have no vested interested in or preference for any of them.

If the retirement age is increased, some sort of adjustment should be made for workers in occupations involving physical or mental stress.  I don't think there should be a special early retirement category in Social Security for such persons.  Rather, there should be a separate program for individuals in occupations that tend to shorten their life spans; some supplemental income that would start at the early retirement date and discontinue when the person becomes eligible for Social Security.

At present the news from the nation's capital suggests that the only proposal under serious consideration is the first one.  I think that instead the conversation should shift to the second and third proposals.  That is, instead of making retirees get by with less, provide more money for benefits and decrease the fraction of the retirees themselves.

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