The Republican budget proposal for 2010 correctly states, “Without reform, its Trust Fund will reach exhaustion in 2041; as a result, future retirees face across-the-board benefit cuts of up to 22 percent in that year.”  Their solution is in effect to reduce the primary benefit by 15% overall in increments of .25 percentage points per year over a number of years, in effect a reduction of benefits by 15%…

Reducing the 15-percent Primary Insurance Amount bracket by 0.25 percentage points per year, from the date at which SSA finds it cannot meet scheduled benefits within 5 years.

http://www.gop.gov/solutions/budget page 33 in pdf

On page 34 they further state,

This proposal is relatively modest compared with the magnitude of the Social Security challenge. But it will begin a process aimed at developing bipartisan reforms to ensure Social Security’s sustainability over the long term.

So, they admit this is a “modest” proposal.  What they are not saying is that they think further cuts in benefits will be required to save Social Security.

When Social Security was first devised the retirement age for full benefits was 65.  This was almost exactly the life expectancy for that time.  Life expectancy now is 77.9 years (National Center for Health Statistics).  I think that Social Security could be saved by doing the same kind of thing we do with Social Security Cost of Living adjustments.  If we tied the full benefit retirement age to the life expectancy number for those that have not yet starting paying into the system we would not have to reduce benefits and the original intent of the trust fund could be preserved.

One caveat, Social Security was never designed to be a full retirement package.  In those days private company pension plans were common.  That does not really exist anymore.   However, I think we probably should look at Social Security as a safety net not a ‘be all end all’.  I think we can also significantly help seniors on the Medicare front but I will put that in another post…

So my Social Security goal would, in effect, meet the 22% reduction requirement by 2041.