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.

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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!

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