One of the solutions tossed about for the Social Security “crisis” is to raise the retirement age–or to raise it more quickly; it’s already headed up to 67.
Kevin Drum says no:
So why not work longer and retire later?
Answer: because we don’t want to. Sure, we could continue inexorably raising the retirement age, ensuring that no matter how much richer we get and no matter how many medical advances we make, we’re still working til we drop. We could do that, but we don’t want to. Most of us like the idea that we’ll have more years of “active retirement” (i.e., “free of chronic functional impairment”) than we did 60 years ago.
And guess what? We can.
If I had to pick from the other solutions on the table, I’d eliminate the cap on FICA wages, with a caveat: to the extent that Social Security is overfunded (as it would be if the economy grows more quickly than the Social Security Administration projects in its intermediate model), raise the floor on FICA wages. That is, exempt the first $10,000 (replace with the appropriate amount) of wages from the FICA tax.
That way we don’t create a permanent Social Security Trust Fund surplus to be siphoned off in income tax cuts.
Update: Nathan Newman (among others) points to a new SSA actuarial memo that shows that removing the cap would indeed fix the shortfall under the Administration’s 2004 intermediate assumptions.
Update 3/2: Nathan Newman responds to Mark Schmitt’s objection to raising the cap.