Marco Rubio has proposed a plan for saving Social Security at NRO.
Sidebar: Many of the comments at NRO deal with individual accounts as proposed by W. and others. It is our preference too but our opinion is that the cost of transition from the current system to investment accounts and the current debt position of the USA means that such plans are no longer viable. End sidebar
The plan has three components:
- Increase the retirement age for individuals under 55.
- Reduce the growth of benefits for upper income seniors and provide more for lower income seniors.
- Eliminate taxes on interest, capital gains, and dividends. [This appears to be for all investors.]
Rubio’s proposal does not seem to be budget neutral. The increasing of retirement age that Ohlemacher discusses only takes care of 44% of the shortfall. Of course, Rubio might be increasing the early retirement age to more than 64 although that seems unlikely. Item number two seems at best a wash and item number three is expensive.
Rubio makes an excellent point that we need to consider retirement investments at the same time Social Security is reformed. We would be more drastic on point two. It seems to us that sending checks to Warren Buffet or Mitt Romney would be a political loser. Phased in means testing makes sense to us starting with reducing increases immediately.
Rubio has a plan. It is not a bad plan but we need more details. Any proposed plan should be a permanent solution and should encourage savers because Social Security is part of retirement rather than than everyone’s sole support. Let’s hear from the rest.