The current income-maintenance provisions for retirees and their surviving spouses are adequate. My proposals are directed at controlling the cost of these benefits.
First, I propose selectively raising retirement ages so that people in relatively sedentary jobs will retire later than people in jobs that are physically demanding. The range for eligibility to receive full social security benefits might extend from sixty-two to seventy. Such a system of scaled retirement ages would offset to some degree the bias of the current system in favor of white-collar workers, who begin work later in life and generally live longer. As a safeguard, career tracks could be defined such that people could not qualify for early retirement by shifting occupations late in life.
Second, I propose linking benefit levels to increases in the consumer price index after retirement, rather than the current system of continuous benefit indexing during future beneficiaries' working years. This change would have the practical effect of making social security less like a defined-benefit plan and more like a defined-contribution plan. Increases in initial benefit levels for succeeding cohorts of retirees would be left to the discretion of the political process. As they do now, benefit cash values would vary directly with earnings, and replacement rates would vary inversely with earnings.
Third, I propose taxing a progressively larger portion of retirees' benefits as household income rises. For example, a portion of
benefits would become taxable when a household's total income reaches one-half of the national median income. The portion of benefits subject to tax would increase with income, and all benefits would be taxable for households at or above the median income. Such an approach would assure benefits for those who have paid into the social security system but also reduce the net cost of public social provision for households with relatively comfortable incomes. This approach also reflects the basic purpose of social insurance, to mitigate social hazards. If little hazard appears, only minimal insurance needs to be applied.
Other proposals might be made to address such issues as the equitable treatment of couples as opposed to single persons, but these are beyond the scope of my intentions here.