Make Social Security Financially Sound
The AREF/NRLN believes Social Security should be made financially sound without reducing current and future retiree benefits. Our view is that the Social Security system is not broken. Threats to the system can be averted without dismantling the program. Current and future retirees and their employers have paid taxes to fund this benefit and the annual inflation adjustment.
Elements of legislation to make the program sound for current and future generations should include:
- Ensure the solvency of the program for the next 75 years.
- Change the annual Cost-of-Living Adjustment (COLA) from the current CPI-W index pegged to urban wage earners’ living expenses to CPI-E (Elderly) based on older Americans’ spending patterns, including high medical costs.
- Provide an across-the-board benefit increase equivalent to about 2% of the average Social Security benefit.
- Increase the minimum benefit to ensure that workers with many years of low earnings do not retire under the poverty line.
- Raise the payroll tax rate starting in 2022 so that by 2043, workers and employers each would pay 7.4% toward Social Security, instead of the 6.2% each worker and employer pays today.
- Impose payroll tax rate to the current earnings amount above $400,000. While there appears to be a doughnut hole between the current $147,000 taxable limit and the $400,000 limit, this doughnut hole will shrink annually as under existing law the current maximum earnings amount subject to the payroll tax increases each year.
Annual increases in Social Security benefits should equal or exceed the percentage of any Congressional pay raises for that year.
