Last week, we examined the Republican and Democratic parties’ platforms regarding Social Security. The Republican position would allow us to invest some of our Social Security savings in the stock market. The Democrats advocate higher taxes on the wealthy to ensure Social Security solvency.

Solutions for Social Security's problemsThis week, I offer my own platform, a list of proposals that I think provide common sense solutions to the real problems that the Social Security system faces, while offering some new benefits.

Jerry’s Platform on Social Security and retirement security

  1. Permit deferral beyond age 70. The later that people start benefits, the more money they would get each month. Deferring payments would reduce the outflow of cash from the system and would buy time for younger earners to enter the job market and start paying their share of taxes. Most demographic projections predict that immigration to the U.S. will increase the population of young earners enough to solve most of Social Security’s financial issues.
  2. Allow a gradual move into Social Security benefits. As people live longer, more of them prefer to cut back on their work, but not stop working completely. So let them do it and receive a portion of their Social Security benefits necessary to complement earned income. Like the above, payouts would increase in the long-run, but cash flow would be lower in the short-run.
  3. Permit buy-in into Social Security system from 401(k) or Rollover IRA savings. This would provide new cash for the system and in return provide an additional annuity of guaranteed, inflation-adjusted income to participants. Encourage this option by not taxing a portion of payments, up to a nominal amount.
  4. Continue credits when people drop out of the workforce to care for a parent or raise their children. There is a cost associated with this proposal that would have to be offset by slightly higher taxes on participants.
  5. Increase the Social Security tax brackets to keep pace with an increase in benefits. Right now, the tax brackets are not increasing with inflation, causing more Social Security benefits to be taxed.
  6. Offer a universal IRA to everyone. This should be available to all, whether they work a 9-5 corporate job or not. It, too, should be convertible to Social Security at the appropriate time.
  7. Gradually increase the “normal” retirement age. As part of the above package of enhanced benefits, reflect Americans’ increased longevity and slowly push back the date of retirement.

All of these ideas are designed to support the long-term health of Social Security and to provide basic retirement benefits to everyone. There certainly isn’t the political will to enact them all now – that would take compromise. But at the risk of sounding too much like a politician running for office, these are the types of ideas we need to protect families and a viable Social Security system.

If you want to talk more about Social Security, write to me at Ask Jerry. I look forward to continuing the discussion.