The most popular solutions to solving Social Security’s pending shortfall problem in less than 20 years have focused on one of three things, increasing the retirement age, increasing taxes or reducing benefits, but there may be a better option.
The means-testing solution has been mentioned, although not that often, but it is an intriguing idea that limits Social Security benefits to only the people who need them.
According to a recent story in The Motley Fool, former New Jersey Gov. Chris Christie offered a means-testing solution to Social Security during the 2016 presidential campaign, which would’ve eliminated Social Security benefits for individuals with adjusted gross incomes (AGI) of more than $200,000 and reduced benefits for anyone with AGIs of more than $80,000.
The means-testing solution obviously eliminates the ability to collect Social Security benefits for the wealthy. This would ensure more funds are available to meet 100 percent of Social Security obligations for those who rely on them and extend the life the program. About 60 percent of current beneficiaries rely on Social Security benefits for over half of their income and one-third of these people rely on benefits for 90 to 100 percent of their income.
The means-testing idea is not without opposition, just like increasing taxes, reducing benefits or increasing the retirement age. Those who oppose it claim that no matter how much money someone has they should receive benefits if they pay into Social Security like everyone else.
There is an easy answer to this argument though. When Social Security was established in the 1930s it was established to provide retirement income to people who were struggling after they were unable to work. If implemented, Social Security would be like other types of social programs that provide benefits to people who need them, not to people who don’t. We all pay into those other systems through our taxes and don’t receive benefits.
