There are several plans floating through Congress right now focused on Social Security. The majority of the plans provide ways to improve dedicated funding for future benefits, and some plans even call for an increase of benefits. Earlier this year the National Academy of Social Insurance (NASI) released Social Security Benefits, Finances, and Policy Options, a study that had some interesting suggestions of how to strengthen Social Security. Two of the areas NASI looked at were the future adequacy of Social Security benefits and ways at increasing revenues at Social Security. These are both topics that are addressed in multiple bills in Congress, but the NASI has some pretty logical suggestions of ways to do both. Below are the plans from the NASI.
Options that would help raise revenues include
1) Lifting or eliminating the cap (now $132,900) on the earnings on which workers and their employers pay Social Security contributions.
2) Gradually increasing the Social Security contribution rate from its current level of 6.2%.
3) Subjecting income from investments to Social Security contributions.
4) Treating all salary reduction plans like 401(k)s (subjecting income paid into them to Social Security contributions).
5) Restoring estate tax to 2000 level and dedicating to Social Security.
Options that would improve the adequacy of benefits include
1) Updating the special minimum benefit to ensure that long serving, low-paid workers can remain out of poverty when they retire.
2) Reinstating student benefits until age 22 for children of disabled or deceased workers (currently, benefits for these children stop at age 18-19).
3) Allowing up to 5 childcare years to count toward benefits.
4) Increasing benefits for widowed spouses in low-earning couples.
5) Modestly increasing benefits for all by changing the benefit formula (to increase the first PIA bend point by 15 percent).
