The Social Security Administration announced today that social security benefits would be increase 0.3% in 2017 to account for cost of living adjustments. This amounts to about $60 per beneficiary per year. Social Security is often times considered a “third rail” topic as it directly impacts a very large, politically active group of voters.
At some point in time, though, Social Security is going to have to be addressed by the United States. There aren’t enough workers paying into the program to guarantee the long-term solvency of the fund and the benefits received by retired workers – in numerous cases their only retirement funding – are near poverty levels.
Bernie Sanders’ voiced his displeasure with the increase, projecting an expansion of the program.
Seniors and disabled veterans need more help than a few extra dollars in their monthly checks. We must expand Social Security. https://t.co/TIF4loay8j
— Bernie Sanders (@SenSanders) October 18, 2016
By expansion of the program, Sanders and many progressives actually mean removing caps from the employee and employer contributions going into the fund. I disagree with this approach as it disproportionately impacts small business owners who are responsible for both sides of the tax, currently at 12.8%.
What the United States really needs is to scrap the entire system and start over. In my mind, the idle system would shift toward a public-private model that protects low and middle income workers by allowing them to build a inheritable asset.
The execution of this idea – a subject for a more detailed report in the future – would include the following:
- Worker contributions to a private account
- Public-private return guarantees
- Fee-free support
Again, the full idea will be available at a future date, but we must begin to start thinking about new institutions, not further funding broken programs.