The President's private accounts plan gets all the Social Security attention, but it's not designed to "save" the system. With or without the accounts, Social Security still faces shortfalls in the future. There are four plans out there that the President has mentioned. One radical change would be to tie your benefits to the increase in consumer prices -- instead of wage increases.
Right now, your benefits are tied to wage hikes which rise faster than inflation. So each generation's retirement benefits are more expensive than the one before.
Tying your benefits to inflation would keep the value constant in real dollars.
The Congressional Budget Office figures this change would reduce the promised monthly benefits for people retiring in 2065 from $26,000 under current law to $14,000. That'd add up to more than $4 trillion over 75 years, more than enough to cover the expected $3.7 trillion shortfall.
Critics -- including Republicans -- say it could send retirees into poverty. Giving you an idea of a world where $14,000 a month is below the poverty line. (NYT)
No comments:
Post a Comment