Social Security
A proposal to change the program
Reducing Benefits: This can be done in various ways. Monthly benefits can be reduced by minimizing cost of living adjustments or by minimizing the primary insurance amount (PIA) for a certain average indexed monthly earnings (AIME). Other proposals include targeting reductions towards high-income retirees. Benefits can also be reduced by increasing the retirement age or imposing full taxes on social security benefits. These benefit reduction proposals are some of the simplest and cheapest to implement. If future clients expect lower benefits, they are expected to save more or work longer; all of which will have a positive effect on the economy (Midgley, 2006).
Complete privatization: one of the radical proposals is to erase the social security system and encourage individuals to save in their accounts held by private investment companies. Owners of accounts will have great discretion over their decision of investment and any balances retained after death will be passed to heirs. This proposal is likely to increase employees' relationship to their retirement benefits thus motivating individual saving and responsibility. A full privatization will also eliminate the subsidization of one-earner couples.
The most effective changes
Complete privatization will enable employees to divert a percentage of their salary taxes to private accounts. This will demand levying a new tax to continue to pay social security benefits to individuals who retired at the time of privatization. This means that privatization will be a viable substitute, producing efficacy gains. Recent studies on the issues shows that privatizing in a manner that reduces distortions of labor supply to current and future generations will not hurt initial retirees. This will be a Pareto improvement. The most common approaches to privatization will reduce distortions because they offer long-term...
Similarly, such an implicit wealthy tax can give participants a higher return on their future contributions. Therefore, this will decrease the effective tax rate on their supply of labor. On the contrary, the efficiency of the benefits of the U.S. will exceed projections although there must be caution because this approach ignores the costs associated with the personal accounts.
Do you feel society owes our older population monetary and medical assistance? Why or why not?
Even though the society owes the older monetary and medical assistance, the current financial crisis, coupled with the high unemployment rate and the ageing baby Boomer, there is insufficient money derived from pay tax revenue to pay the older population such assistance. This has left many Americans worried about the future of the social security especially as they retire. For social security to give our older population monetary and medical assistance, Congress needs to figure out a strategy to show up the deficit in the program. If not, it will have to pay out reduced benefits (Brown, Liebman & Wise, 2009).
Instead of the older population, relying on social security as a way of medical and monetary assistance, they should depend on their own savings and investments. Individuals must seek ways to ensure they protect their future and have a future that does not include social security. Forecasts by the social security board show that there must be enough funding coming into the system to cater for at least half of the expected benefits by 2030. Therefore, it…
