Policies to Increase the Viability of Social Security

Policies to Increase the Viability of Social Security
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Policies to Increase the Viability of Social Security
Table of Contents Executive Summary. 3 Introduction. 3 Social Security Policies. 3 Increasing Payroll Taxes. 3 Increasing or Eliminating Tax Cap. 4 Expanding Compensation Subjects. 5 Increase the Full Retirement Age. 6 Savings Policies. 6 Empowering People. 7 Tax Incentives. 7 Conclusion. 8 References. 9 Appendices. 10 Executive Summary
Statistics show that the Social Security program will become insolvent in about 17 years from now. This implies that most retirees will not be able to meet their needs in the future. Moreover, savings among most Americans are very low with majority not having any savings. Based on this information, this report provides policy changes that will ensure Social Security solvency in the future and encourage people to save more.
Introduction
Social Security is America’s largest social program and accounts for more than a quarter of government spending, which makes it one of the largest items in the government budget. Before the creation of Social Security, most Americans could not support themselves after retirement. However, today majority of these retirees can support themselves through the program, although it is controversial. Much of the controversy revolves around its long-term financial viability. It has been argued that money from the program is not used for its intended purpose prompting its proponents to claim that if the money was used for its purpose and encouraged shared economic sacrifice, the financial viability of Social Security would be assured. Based on the available data and forecast, within 17 years, Social Security funds will be depleted if timely actions are not taken. This paper proposes some changes to the existing policies regarding Social Security to increase its viability and how the Fed can encourage its residents to save more.
Social Security Policies
Increasing Payroll Taxes
When employees check their paychecks and see deductions for Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI), it demonstrates their contributions to Social Security. Employers make similar contributions on behalf of employees. Payroll taxes account for more than 85% of the sources of Social Security revenues (See Appendix A) (Social Security, 2021). Therefore, an increase in payroll taxes implies that more money will be coming in to fund Social Security benefits in the future. This policy should apply even to those who are self-employed. The current policy requires that employees pay half of the contributions while their employers pay the remaining half. The self-employed are required to pay the taxes in full per year. For this policy to be effective, the Federal government should address the current wave of unemployed individuals. With more individuals in employment, either self-employed or working class, more money will be contributed to the fund.
Restoring the viability of Social Security will depend on when and how the rate is changed. If it is implemented now without changing other taxes or benefits, employers will start...