For over a year now, a theory on how to save Social Security has been bouncing around in my head. The straight-forwardness of my plan is grounded in pragmatism, yet it is strangely absent from most of the dialogue in and outside of the Beltway. I propose to gradually increase the age at which people receive benefits.
The problem with entitlements such as Social Security and Medicare is that as baby boomers retire, it will become increasingly (and dramatically) more expensive to continue providing the same level of benefits. According to the Social Security Administration, over $550 billion was distributed in 2006 with the bulk going to retired workers. That number could easily quadruple in the next 10 years.
Saving Social Security rests on people in our age category accepting that we will not draw on Social Security until we are 72. In solidarity with the people just beginning to work, those between the ages of 25 and 35 would start drawing on Social Security benefits at 71, workers between 35 and 45 would wait until they were 70, and so on and so forth. People retiring in the next five years would still retire at 67.
Increasing the age at which seniors begin receiving social security benefits does a great deal to reducing the amount of funds that must be given out each year. As a result, the system remains solvent much longer.
But most policymakers and voters deride this thinking. We have been paying into the system our whole lives, baby boomers complain. Social Security owes them. If you can find a politician who advocates increasing taxes or decreasing benefits to senior citizens I will give you a four-leaf clover.
Conservatives and those favoring a market approach argue that "private accounts" is the way to save Social Security. These are the same people who said we would be greeted with flowers in Baghdad. A large section of the work force already has private accounts: they're called 401(k)'s.
Private accounts are unlikely to save Social Security because, like many things President Bush supports, they avoid logic. There isn't a Social Security "trust fund" where all the money taken out of your taxes has been placed. It was spent soon after the government received it. That's just the way it works. In other words, the money that baby boomers have been paying toward Social Security was spent long ago.
Consequently, the burden of providing baby boomers Social Security benefits falls on our generation and Generation X-ers. If people our age began establishing private accounts, one of two things would have to happen: we would either borrow the money to fund the private accounts (since the Social Security tax being taken out of our paycheck would go to paying baby boomers) or the opposite would occur and we would have to borrow to pay the retirees. Both options end in massive borrowing. As if our nation doesn't have enough debt!
I am not arguing that Social Security as a concept or in practice is perfect. But it can be agreed that keeping our nation's elderly out of extreme poverty is worthy goal and one our generation should embrace. Increasing the age at which people draw on Social Security (coupled with other sensible policies) is the only way to save the system.
Seventy-two is as arbitrary an age as 65 or 67, especially with increasing average life spans. The sooner we younger folk accept that, the more likely it is that we will fashion an equitable and sustainable system. Yeah, it sucks that we would have to work until we were 72 while our parents were able to retire in their sixties, but get over it. Plan ahead for your own retirement. But realize that for Social Security to continue to exist, we all have to sacrifice, some more than others.
All this movement needs is a catchy slogan.
Tom Noble is a senior in the
School of Public Affairs.
