Right now the COLA (cost of living increase) for Social Security is calculated based on the inflation rate for wages, not prices. Inflation has been so low that the COLA has been higher than the rate at which prices have gone up. Besides, if your retired, the importance of a COLA is to keep up with prices, not the working guys wages.
One of the suggestions is to use a price based COLA for Social Security. Some long range projections I seem to remember look like 25% lower benefits, than now projected, after 2030, for the higher level beneficiaries.
Unfortunately, I have never yet seen a combination of proposals that eliminates the need for some use of general revenue taxes for some portion of the Social Security shortfall.
Where is the $$$ in deferred taxes that will be paid on our 401k's, IRA's,pensions listed on the books 20-30-40 years out?
Getting it indexed to growth in the cost of living has to be the first step. Nothing is more powerful then that over the long run, in allowing us to deal with the issue.
Right now if we make our workers more productive, it will simply raise wages as always.. meaning we are in the exact same situation with SS as we are in now.
The amount of reduction this would mean for benefits would depend on the amount the productivity increased in the meantime. If we had say double productivity by 2030, which we should be able to accomplish.. then SS would only be 50% of the benefits as if we left the current way in place.
Even the Europeans, and Canadians have their pensions indexed to the cost of living, not wages.
http://www.businessweek.com/magazine/content/03_26/b3839102_mz029.htm