This is as good a time as any to fix Social Security’s financing problems. In fact, Congress’s decision to allow the 2-percentage-point reduction in the payroll tax to expire as part of the fiscal cliff negotiations clears the path for restoring full solvency. Of course, Social Security has not contributed to the deficit in the past and technically cannot in the future because, by law, expenditures cannot exceed earmarked revenues. But Social Security’s promised benefits exceed scheduled taxes, creating a financing shortfall that needs to be fixed.
The proposition sounds plausible, and it’s widely accepted in some circles, but the data don’t support it.
A look at the effects of tax breaks for low-income families with children.
Encore: Fixes that could protect investors from high fees—and their own mistakes.
Encore: A look at several alternatives to the 4% rule.
Encore: Ryan’s health care plan could help restore fiscal balance, but at whose expense?
Core benefits are supposed to be protected, but there are exceptions. And it’s not just new hires who are at risk.
Encore: With retirement incomes falling short of expectations, reverse mortgages could help Americans maintain their standard of living.
Munell: The bad news: participation is down. Worse, median balances remain low.
The new fee disclosure requirements for 401(k) plans do not include the trading costs, which can be costly, Munnell writes.
Current employees and retirees may not be immune to changes being made to some pensions, Munnell writes.
Even a small reduction in 401(k) fees could give a big boost to investor returns, Munnell writes.
Retirees who fear they’ll miss out on total benefits by delaying Social Security are likely mistaken, Munnell writes.
Raising the payroll tax rate 1.3% for employees and employers would keep Social Security solvent for another 75 years, Munnell writes.
Given the likelihood of cognitive impairment with old age, retirees should take steps to protect themselves from poor decisions late in life, Munnell writes.
Retirees who postpone taking Social Security effectively “buy” an annuity from the government, Alicia Munnell writes.
Economic research suggests the top tax bracket should be raised to somewhere between 50% and 70%, Munnell writes.
This December the Bush tax cuts, the 2% payroll tax holiday, and changes to the Alternative Minimum Tax are all set to expire at once.
There’s a good argument for temporarily suspending cost-of-living increases to Social Security, Munnell writes.
Social Security, Medicare, and Medicaid are not providing greedy people with special privileges, writes Munnell.