Thursday, December 27, 2012

CNBC analyzes the "ugly" fixes to social security: reduce spousal survivor benefits?

NBC News and CNBC have a primer on how to fix Social Security – “but it won’t be pretty” or “it may get ugly”, by Allison Linn, link (website url) here.

All the familiar proposals are included, such as raising the FICA limit, the FICA rate, gradually increasing eligibility age, and using a chained CPI.

Of course, means testing is mentioned.  And almost no one discusses when means testing starts, only at some point in the future, or even for current retirees? 

There seems to exist a philosophical disagreement as to whether social security is “insurance” against old age poverty, or whether it should be a viewed as an annuity related to FICA “premiums” paid.  The 1960 Supreme Court ruling on the subject does not comfort those who made years of contributions already.

A new wrinkle is to dial down benefits for married surviving spouses (yes, even straight spouses) because two  income families are so much more common.

Changes in retirement age might affect poorer people more, because they don’t live as long. But a chained CPI would affect the very elderly poor the most.  

No comments: