The way out of the social security morass is to go to a forced defined contribution plan (401K’s) for people under a certain age, say 40, and deduct a small portion of wages to cover a means-tested retirement payment for people who would go without shelter and food without it, much like nursing homes now operate. If you’ve got the money to pay for nursing home care, you pay it yourself; if and when you don’t, the government steps in. That’s humane, but doesn’t give away the store.
Then, in 30 or 40 years, aggregate social security payments would be significantly reduced by the means testing, and most people would have significant 401k’s built up for their retirement. And with only a limited number of people qualifying under the means testing, the pressure to continually pump up benefits would diminish considerably, unless the program became fully funded at which point benefits could be increased and/or the tax funding the means-tested program could be reduced.
At a minimum, anyone entering the workforce today should be put on such a program. Those who’ve paid in for, say, five years already could be offered non-public treasury debt as buyouts from SS, to be placed in their 401K plan. This could be done for everyone up to a specified age, say 40, 45, or even 50. Eventually we’d get to a more stable situation that way.
States are finally realizing that defined-benefit retirement plans lead only to fiscal disaster. The federal government needs to come to the same conclusion, and soon.
and make this mandatory for gubmint employees to replace their current pensions.