Saturday, June 25, 2005

Social Security Indexing

The economists and politicians mostly support raising the retirement age because Social Security is relatively better as social insurance than it is as an investment. Most people don't support raising the retirement age because they don't want to be told when to retire, which is why the retirement age should be abolished. The retirement age should be replaced with a more flexible age/benefits curve. For better investment, private accounts should be like Phillip Longman's early retirement accounts where contributions raise the age to collect benefits rather than reducing benefit levels. Pozen style progressive indexing could apply to both retirement age and benefit levels to achieve solvency. We could keep a reasonable retirement age for low earning non account participants while reducing government spending on high earners and account participants who don't need government benefits while preserving the old age insurance aspect of Social Security.

Workers should work until their benefits are enough to live on, or until they have enough savings in private and other accounts to last until their benefit levels increase to sufficient levels for continued retirement. Not all retirees are the same, so why should everyone have the same retirement age?


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