Included in Sen. Rubio’s ideas are:
–Social Security solvency: Rubio would gradually increase the retirement age in line with life expectancies and reduce the growth of benefits for higher-earning individuals. In addition, Rubio favors strengthening the safety net for lower-income retirees.
–Delayed retirement: Rubio would eliminate the 12.4% payroll tax for retirement-age individuals to encourage them to stay in the work force. I really like this idea and wrote on it for the Wall Street Journal.
–Open the TSP: Rubio would allow workers who are not offered retirement plans by their employers to participate in the federal government’s Thrift Savings Plan, the DC pension for government employees. In a way, this builds upon the President’s myRA proposal, but allows for greater choice in investments.
I am a big fan of indexing the age of eligibility for retirement benefits to average life expectancy at age 60. I would like to see that done for Medicare as well. People can still retire when they are younger and healthier, but not on someone else’s nickel.
We’ve now come full circle, have we not? One of the selling points of the Social Security Act way back when, I recall having read, was that it would encourage older workers to leave the labor force and retire (thus, hopefully lowering the unemployment rate). Now, it seems, we need to reform Social Security to encourage older workers to stay in the labor force because it’s too expensive to let them retire.
This seems like one of the best proposals I’ve heard when it comes to SS.
It’s main benefit is that it doesn’t make any substantial changes to how it works, it’s just clipping its wings in a few important places, and creating better incentives.
Private accounts seem like a good idea if you’re starting from scratch, but I don’t see how our political system can handle it.
If you want to outright pee on the third rail, you have to also take into account that life expectancy even at age 60 varies by a few years depending on race and sex.
I think the untouchability of Social Security is best exemplified not by politicians’ reluctance to tweak the benefits formula ages more frequently, but by the reluctance (on both sides of the aisle!) to examine it for disparate impact.
Not quite. It’s more of a ‘conflict of rhetoric’ scenario.
Ceteris paribus a disparate impact analysis would find that Social Security benefits would benefit white and Hispanic (and presumably Asian) women at the expense of white and black men. But all is not equal, and one must take into account questions about who are the breadwinners and widow survivors, etc.
Yes, black men are hit hardest by the unfairness built into the system and progressives want desperately to improve the condition of black men, but they also want to bolster and expand SS, not undermine it. The logical implication of their solution to the problem would be to pay black men and their survivors more to be ‘fair’, but not reduce anyone else’s benefits.
The Data: Life Expectancy at age 65 in 2010:
Non-Hispanic White Male: 17.7
Non-Hispanic White Female: 20.3
Black Male: 15.8
Black Female: 19.1
Hispanic Male: 18.8
Hispanic Female: 22
Another change that would provide greater flexibility for those approaching retirement age would be to detach Medicare from Social Security. Eligibility for Medicare Part A Hospital Insurance is tied to monthly Social Security benefits. Any individual establishing entitlement to monthly SS benefits CANNOT decline Medicare Part A if he is age 65. For example:
I am 68 and still working full time. I took Medicare at 65, and spousal SS benefits at 66 (and am banking those SS funds), and I will apply for my individual SS benefit when I turn 70 (or quit or get laid off, whichever comes first!)
I would have preferred remaining covered by my employer’s health plan, where I could have continued to contribute tax-deferred dollars into my Health Savings Account, but I can’t contribute to an HSA if I am enrolled in Medicare.
I’m sure this structure made sense to someone at the time, but it perplexes me.
What bugs me is that the employee does not the 12.4% on his pay stub, he only sees 6.2%. That sees fraudulent to me.