Introduction: Recutting the social security pie (Part 1 of 3)

Hello Readers,

Earlier this month, I offered a letter to the newly re-elected president, in which I discussed the need for swift and decisive action on climate change and the national debt crisis. I reasoned that by taking action on issues that will greatly impact my grandchildren's grandchildren, we can see immediate improvements in the short-term while moving in the right direction overall.

This week, I would like to take some time to see if we cannot help future generations and current generations (old and young) all at the same time. To do so, I propose that we dance on another third rail (perhaps the sixth rail?) of politics: social security reform.

Over a year ago, in the summer of 2011, I offered a detailed '3 year plan' proposal for implementing automatic adjustments to the social security retirement age. With much clarification provided in the posts (links provided at the bottom of this post), the proposal boiled down to this:

The United States government should enact legislation that implements an automatically adjustable retirement age for social security retirement benefits, such that: during the decade in which citizens turn 50 their retirement age will be set at an age that is 3 years less than the average United States life expectancy at the time.

After carefully re-reading and re-considering my thoughts from last year, I stand by that proposal, and I would like to offer up some more thoughts to President Obama and the Congress as they swerve to avoid the so-called "fiscal cliff" at the end of this year.

Before I start to layout my new proposal to re-cut the social security pie, I would like to point out that I know that my idea will not be perfect (and will need a lot of collective thought and will-power to implement effectively). Thus, I strongly encourage my readers to consider the spirit of my proposal fundamentally set while considering the numbers in my proposal to be entirely negotiable.

Now, as I understand it, many people have argued about the merits of whether or not the 'social safety net' of social security should exist (even if some elected officials equivocate in public for the benefit of gaining senior citizen votes). However, for the sake of moving towards action, it is important to come to an understanding that whether or not you believe that social security should exist or not, it does exist.

It exists, and millions of people now depend on it as at least one of their primary sources of income.  It exists, and it will not be politically feasible to (safely) dismantle it (even if you would like to see it go). It exists, and it directly impacts most of the country (whether they are paying into it whenever they are working or they are receiving payouts now or are expecting to receive payouts soon).

As such, I hope that all of my readers, will concede that social security exists, so it is important to address its viability now to avoid potentially devastating financial consequences that will span generations. To address this viability in the fairest and most politically actionable manner, I propose that we start in the middle of the middle of all reasonable proposals for social security reform (at least of those that I have come across) and then add a little bit more.

In essence, I suggest that we begin to divide up the social security funding allocation pie.** While this may superficially seem to make the process more complicated, please stay with me and hopefully it will make sense at the end. I believe that we should divide up the pie into four separate (but not necessarily equal) slices:

1. Funds paid out all to current retirees
2. Funds reserved for specific generations of retirees
3. Funds diverted to personal investment funds
4. Funds diverted to paying down any outstanding national debts

In the next post, I will discuss why I believe that social security funds should start to be divided into these four slices. Then, in another post, I will put forth a possible mechanism for implementing this pie-cutting process in a manner that will be fair to current social security beneficiaries but also address the needs of current (and future) generations of workers.

Regards,
Sean

**Throughout this entire series I am focusing solely on the social security program as it pertains to retirees, and I am not proposing to make any adjustments to parts of social security benefits for the disabled or other non-retirees.**

This "Recutting the social security pie" series:
Introduction: Recutting the social security pie (Part 1 of 3)
Reasoning: Recutting the social security pie (Part 2 of 3)
Implementation: Recutting the social security pie (Part 3 of 3)

The previous "Adjustable Retirement Age" series:
Proposal: Social Security Reform - Adjustable Retirement Age
Response: Social Security Reform - Adjustable Retirement Age
Discussion: Social Security Reform - Adjustable Retirement Age (Part 1)
Discussion: Social Security Reform - Adjustable Retirement Age (Part 2)