How to Bolster Social Security Without Raising Taxes

Social Security is structured so that average benefits grow from one class of retirees to the next. We could bring the program a long way toward solvency without cutting benefits from their current levels. Merely moderating the growth of benefits, so that tomorrow’s retirees do not get as large an increase over today’s retirees as the current system offers, would produce large savings.

There are a variety of ways to do that. One, called “progressive indexing,” would let benefits grow at the level of existing law for the lowest-income workers, moderate their growth for middle-income workers, and freeze them in inflation-adjusted terms for higher-earning workers.

When I made these points in this space recently, I got a lot of pushback and follow-up questions from readers. So I’ll respond here to the three concerns that many of you raised.

First: A number of readers thought I was talking about cost-of-living adjustments, and pointed out that they are tied to a measure of inflation. So an individual retiree’s benefit does not grow, in inflation-adjusted terms, over time. This is true. I think that yearly cost-of-living adjustments should be more generous, so that retirees get more support when they are 85 than when they are 70.

But what I was discussing was the program’s initial benefit levels, which are structured so that a person in the middle of the income distribution who retires 10 years from now gets a bigger check than a similar person who retires today.