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The Future of Social Security: 12 Proposals You Should Know About

Pros and cons of options on the table in Washington

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Begin Means-Testing Social Security Benefits

Social Security benefits have always been provided to anyone who has paid into the system and who meets the work and age requirements. That’s regardless of other income — investment, pension, savings — the person receives in addition to Social Security benefits (although a portion of Social Security benefits is taxable if the total income exceeds a certain threshold). One option to help close Social Security’s funding gap is to "means test." Means testing would reduce benefits for higher income recipients and could even eliminate benefits altogether for the highest-income households. Unlike the option to reduce benefits for higher earners, which uses a measure of career average earnings to reduce benefits, means testing would reduce benefits based on the full range of current income. Who would be affected and by how much depends on how the income thresholds are defined.

One version of means testing is estimated to fill about 11 percent of the funding gap.

PRO:
In an era of scarce resources, Social Security can’t continue to pay benefits to all retirees regardless of what other retirement income they have. Instead, the program should provide monthly benefits only to retirees who have less than a certain amount of non-Social Security annual income. Social Security would continue to be insurance against retirement poverty for everyone, but would focus its benefit payments on those who really need them. (David John, Heritage Foundation)

CON: Means testing would change Social Security from an earned right to welfare. It would penalize you if you saved or earned a pension because that income would reduce your Social Security. And it would cost more to administer. The government would have to routinely check your income and assets in order to adjust your benefit. Means testing would be a huge breach of faith with working Americans who earned their benefits by paying in over the years. (Virginia Reno, National Academy of Social Insurance)

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