Sat Apr 13 2013 11:13 am
Raising the retirement age further for Social Security (its currently scheduled to be 67) is a non-starter for most liberals. Its correctly pointed out that the less affluent die at a younger age and often work in industries which are too strenuous to allow for later retirement.
My idea would enable people at the low-end of the benefits spectrum to actually begin collecting SS earlier than current law while those at the higher end retire later.
The idea is to simply place benefit dollar caps at various retirement ages. A simplified approach would be to set the benefits cap for retiring at 65 at a level where 30 percent of beneficiaries are scheduled to receive less than this amount. (The cap would be $1,000 per month if 30 % are to receive $1,000 or less and 70% are schedule to receive more than $1,000)
We might put the cap for 67 years at the 60% level, 68 years at the 75% level,69 years at the 90 % level and then no cap for 70 or beyond.
So, basically anybody who chooses to retire before age 70 will receive the lower of (the cap for the age they selected or their scheduled benefit. Once they select their retirement age this will be their base benefit forever (subject to cola increases etc)
The affect of this will be to allow lower income beneficiaries to retire at an earlier age without incurring any penalties. The bottom 60% of the distribution can retire at the currently planned retirement age of 67 without incurring any penalty. Only those in the top 40 % will need to retire later to receive their full benefit. The top 10% will need to retire at age 70 to receive their full benefit (of course they can choose to retire earlier at the reduced benefit levels set by the caps)
Obviously the caps could be adjusted, the ones I chose were just for illustration. I believe that this plan would save tens of billions per year (more than the chained cpi) while shielding 60% of the beneficiaries from any reductions in benefits and allowing the bottom 30% to actually retire earlier.
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