The social security system has been, according to some, in danger of collapse and insolvency for sometime now. Since 1950 the number of workers supporting one retiree has fallen from 16.5 to 3 while the tax assessed against wages has increased. It is expected the number of workers supporting one retiree will continue to fall and the taxes will probably have to be raised as will the age at which a retiree can recieve benefits.
Which of these other options should be used to make Social Security more solvent?
A.) Privatization of social security
B.) Mean testing
C.) Elimination of cost of living adjustments
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Any of the options that you give here would help to make Social Security more solvent. As to which of them “should” be used, that is a matter of opinion. My own view is that means testing should be adopted, but it is not clear that any of these options would be politically feasible.
The worst of the options, again, in my view, is the option of doing away with cost of living adjustments. It may be a good idea to make sure that those adjustments truly do mirror the real changes in the cost of living, but it would not be good to eliminate them altogether. This is because that would make the value of Social Security go down over time and make it harder for people to live on their benefits as they get older.
Privatization would be a good idea, but it would be difficult for many people and would be politically infeasible (as shown when a Republican Congress rejected President Bush’s attempt to privatize). The problem with privatization is that it would not bring a guaranteed benefit to a retiree and it would generally have to be managed. People would have to change how their money is invested as they age. If the stock market crashed just before they needed to retire, they would be in trouble. All of this makes this option risky.
The best choice would be to means test. Most people who make a good deal of money when working do not need Social Security after they retire. They could easily get by on what they save on their own. If such people got either lower levels of benefits or no benefits at all, the system would be more solvent.
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