Social Security Recommendations to Change Social Security

¶ … Social Security

Recommendations to Change Social Security in United States of America

Social Security is one of the major federal programs prevalent in the United States of America. It is a collective insurance system by which retired and disabled workers, their family members, and family members of the dead employees are paid benefits. The total number of Social Security beneficiaries till 2009 were 52.5 million. Approximately 156.3 million workers were covered by Social Security in 2010 (Nuschler, 2010).

In the past, the Social Security system has faced financial deficits. In 1977 and 1983, a number of measures were endorsed by the Congress to address the monetary imbalance of the system. Those actions consisted of "constraints on the growth of initial benefit levels, a gradual increase in the full retirement age from 65 to 67 (i.e., the age at which unreduced benefits are first payable), payroll tax increases, taxation of benefits for higher-income recipients, and extension of Social Security coverage to federal and nonprofit workers" (Nuschler, 2010). Afterwards, projections illustrated the recurrence of continuing financial dearth as an outcome of modifications in actuarial methods and assumptions. Therefore, a good number of policymakers think that several actions should be taken to reform the system as soon as possible. The Social Security trustees and other panelists and commissioners who have examined the issue also share the same view (Nuschler, 2010).

Recommendations

Firstly, the standard age for retirement must be raised to 67 (Hanushek & Maritato, 1996) as it would facilitate in the restoration of long-range solvency to the Social Security System (Nuschler, 2010). Also, the delayed retirement credit must be increased to eight percent. By doing so, the Social Security benefits for the transition generation would be decreased and the enticement to delay retirement age would be increased. Secondly, the retirement earnings test must be immediately abolished. Thirdly, the management of spouse benefits under Social Security must also be changed (Hanushek & Maritato, 1996).

Changes must also be made by introducing market-based individual accounts so that the retirement incomes could be strengthened and the economies could also be supported by the stimulation of savings and investments. Instead of government-run, pay-as-you-go systems, a unique system must be encouraged that could allow the workers to get hold of the money and provide for their retirement by putting it in their individual accounts. However, all the changes must be aimed at assuring that the expenses and outflows "in any year can be covered by revenues, but that these revenues not exceed expenditures" (Saving, 2010). In simple words, no changes should be made that could contribute to the Social Security surplus. This is because any taxation that would add to a surplus will purely be used up by Congress as general profits (Saving, 2010).