8 Ways to Save Social Security

All politicians are reluctant to fix the problem we will have with Social Security. There are many pitfalls for the policy makers when they have to tackle the problem. According to the Social Security Administration, revenues are projected to fall short of expenses by about two percent of payroll contributions over the next 75 years. While 75 years seems like a long time, there have to be some changes made with Social Security much sooner. The problem for the policy makers lies in the fact that there are no easy solutions. All of them have drawbacks both political and socially. Here are eight ideas from which to pick and choose. The final solution will no doubt be a combination or a variation of these ideas.

1. Presently, as of 2007, Social Security taxes are capped on the first $97,500 of income. Several options are available here. First raise the ceiling to $150,000 or some variation of that or completely remove the ceiling and tax all earnings.

2. The payroll tax rate can to be raised for both the employee and employer. You could manipulate the rate for employer and make it lower than the employee or visa versa. Regardless, it is a fairly straightforward way of strengthening Social Security.

3. The retirement age is presently set at 67 and can be raised in stages to age 70. Since Americans are living longer, a convincing case can be made for increasing the age above the present 67.

4. The present cost-of-living adjustment (COLA) given to each Social Security receiver is intended to protect the benefits from the eroding effects of inflation. The COLA is granted based on the consumer price index (CPI). Some experts believe the CPI overstates inflation and therefore unnecessarily raises the COLA too much.

5. The money that is now in the Social Security trust fund in invested in low-interest government bonds. While these are safe, they do not pay a high enough rate of return to warrant keeping them. Part of the Social Security trust fund money could be invested in higher interest indexed funds that are invested in the stock market.

6. The estate tax has been gradually reduced since 2001 and will be collected only on estates worth more than $7 million or more for a couple. An idea is to freeze that tax at that level with all the tax revenue going to fund Social Security.

7. There are many people who do not need the money from Social Security. You probably can think of several people right now. The more affluent retirees can pay a higher rate of taxation on their benefits.

8. Benefits paid to future retirees could be cut. There are numerous scenarios with this option. One that makes sense and could gain popular support would be to maintain the lower earning worker's future benefits while using some kind of indexing formula to trim the future benefits for higher earners.

These eight ideas are not original. All of them have been suggested by numerous people as ways of saving Social Security. Future policy makers will need to adjust the system in the not too distant future to make sure Social Security is strong and available for all Americans.