Thursday, March 07, 2013
Seniors face both reduced Social Security and pensions or savings contributions from employers, simultaneously
Harold Meyerson has an interesting perspective on entitlement reform, titled “Shortchanging seniors”, on p. A17 of the Washington Post Thursday March 7, 2013. Online the title is “Steering America toward a more secure retirement”, link here.
He makes the point that corporate America is pulling back on not only defined benefit pension plans but also on contributory 401(k)’s. So seniors, faced with losing benefits from Social Security from future reform, also face loss of benefits from work and face working longer.
It is appropriate to work longer as life spans lengthen. Indeed, I pretty much defined the course of the rest of my work life when I decided to author “Do Ask Do Tell” one vacation summer day after my 51st birthday. I was good for three more decades at most.
Meyerson suggests a mandatory “defined benefit” program where employees save some income for private accounts (like privatized Social Security) and employers match. That actually makes it a defined contribution program, but it certainly protects the retiree from politicians.
But it doesn’t say anything about means testing of current Social Security benefits, which could even reach down to current retirees some day if the budget pressures get strong enough. That’s why I favor Congress’s protecting an actuarially determined portion of every current beneficiary’s past contributions.