How to fix Social Security in three steps

By Robert L. Reynolds

President Roosevelt’s Social Security program has been an undeniable success in providing a reliable income safety net for generations of elderly citizens in our country. It was bold policy in the 1930s, guided by common sense and compassion.

Retirement security today is an issue that continues to transcend political affiliation. That’s why I teamed up with another Roosevelt — FDR’s grandson, James Jr., who is CEO of Tufts Health Plan — to speak out about how this venerable program can adapt to the shifting demographics of our time and stay solvent for generations to come. The three-step plan we laid out was reported recently in Barron’s.

As Jim and I see it, Social Security has become an indispensable base for all Americans’ retirement security, but the program faces a multi-trillion dollar funding shortfall over the next 75 years. We need to fix Social Security before we’re in a crisis, and here’s how to do it:

  1. Raise the ceiling on wages subject to Social Security contributions.
    The current $110,100 ceiling reached roughly 90% of all wages until the 1990s, but only covers 65% today. We should set 90% as our target again by 2020, and then index the ceiling to future wage gains.
  2. Slow down the cost-of-living adjustment so it better matches economic growth.
    In recent years, benefits have grown faster than the overall economy, which hurts the program’s sustainability in the long run.
  3. Raise the full-benefit retirement age to 68 by 2030, and index the program to life expectancy thereafter.
    By better reflecting our increased lifespans, the program can do a better job of what it was intended to do: provide a base for financial security in old age.

Fixing Social Security is just one part of what it will take to shore up our national retirement system. We should back up a solvent Social Security program with as close to universal access to workplace-based private savings as possible. This would require preserving all existing tax deferrals for savings through 401(k)s, individual retirement accounts, and other retirement savings vehicles. We also need to extend coverage to all workers by adopting a great, bipartisan idea — the Automatic IRA.


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The views and opinions expressed are those of James Roosevelt Jr., President and CEO of Tufts Health Plan, and Robert L. Reynolds, President and CEO, Putnam Investments. These opinions are subject to change with market conditions, and are not meant as investment advice. Mr. Roosevelt is not affiliated with Putnam Investments or any affiliate.