Senators Graham, Paul, and Lee Introduce Social Security Reform Legislation
Yesterday, Senators Lindsey Graham (R-SC), Rand Paul (R-KY), and Mike Lee (R-UT) introduced the Social Security Solvency and Sustainability Act – Social Security reform legislation which would bring the program into 75-year actuarial balance through significant increases in the retirement age and by slowing the growth of benefits for higher earners. As CRFB has said before, raising the retirement age is a good idea. Working longer is one of the best things people can do for their own retirement, for the economy, and for the fiscal situation. And raising the retirement age would significantly improve Social Security's long-term finances.
The plan would speed up the increases in the normal retirement age that exist under current law, increasing 3 months each year starting in 2017 and reaching 67 by the year 2020 instead of 2027. The plan would continue to increase the retirement age 3 months a year thereafter until reaching 70 in 2032, and would then index it to life expectancy. By 2085, the retirement age would reach 72 and 3 months.
The plan would also increase the early retirement age from 62 to 64 by 2028, which many experts believe would substantially improve work incentives (though it would have almost no direct effect on Social Security's finances).
The plan also limits benefit growth for higher earners for new retirees. Beginning in 2018, new retirees will have benefits calculated based on wage-growth for their first $43,000 of lifetime earnings, and based on price-growth for earnings over the first $43,000.
This is a serious and thoughtful proposal, and we need more of them if we are going to put Social Security on a sustainable path. Some mixture of benefit cuts and tax increases will be necessary and should be enacted sooner rather than later.