Everyone knows that Social Security is seriously in need of reform. But now that the retirement savings of so many Americans have been decimated by declines in the stock market, shoring up the program seems more important than ever.

Meantime, the options for what to do are dwindling. It's clear now that President Bush's main proposal for reform -- putting the money in the stock market -- would have been a recipe for disaster. Congress already raised the age you start getting Social Security to 67 for all people born after 1960, so raising it even further -- especially as increased unemployment forces more people into early retirement -- seems ludicrous. Both presidential candidates are against increasing the retirement age any further.

So what's left? McCain wants to set up a bipartisan commission to solve the problem -- perhaps by letting people create private accounts that they could invest in the stock market. Obama wants to raise the payroll tax for people who make more than $250,000.

I think those are both bad ideas. My preference is that politicians find a fair way to reduce benefits so we can afford payments to folks that really need them. It seems pretty obvious that Social Security should not go to the rich. So we can start by phasing out payments over a certain income level. The sooner we start, the easier it will be to fix the program.

Don't miss the rest of our series on Makeovers Needed!


Something must be done soon. As baby boomers retire, the amount collected will be less than needed to fund the program in just nine years and the so-called "trust fund" will be depleted by 2041, according to government figures (via AP).

I'm 42, so if I start collecting Social Security at age 67, that will be 25 years from now, or 2033. That puts me and my age group right at the sweet spot where we face real worry that our Social Security benefits could disappear just when we're starting to count on them.

Reducing benefits now would be painful, but I'd rather know I was going to get something from Social Security, however small, than wonder if I'd ever get anything at all.

Update on 10/25/08: A fellow WalletPop blogger, Lita Epstein, schooled me on some misconceptions I had in the last line of my post. As she explained, even though the trust fund will be depleted by 2041 if Social Security isn't changed, that doesn't mean benefits would stop being paid out. It just means they would be paid out of current payroll taxes and the amount collected could cover most (but not all) of projected payments due at that time. Lita wrote The Complete Idiot's Guide to Social Security and Medicare so she knows this topic well!








Increase your money and finance knowledge from home

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum