Saving Social Security

In the United States, the Social Security system still takes in more money from workers than it sends out in checks to retirees. However, this surplus has not been safely tucked away for the future--it is used every year to fund the rest of the government. The Social Security Administration estimates that by 2014 the money flowing out will exceed the money coming in, and so the White House has established a commission composed of members of Congress and former government officials to work out a plan to save Social Security. The Wall Street Journal reports that the major items to be considered include raising the retirement age (but no higher than 70), cutting back on benefits (especially to higher-income retirees), and raising taxes on current workers (mainly by increasing the income ceiling--currently $106,000--on which taxes are paid into the system). None of these is a new idea, but it is important to have them out there being discussed.

"We're prepared to be quite supportive of a real engagement on the issue," said John Rother, director of public policy for AARP. Acting sooner allows for changes to be made gradually, he said, and will reassure younger workers that the program will be there for them.

Western European countries generally have more generous programs than the US and also have a more rapidly aging population, so the issue is even more acute there:

Germany raised its retirement age by two years, to age 67. In France, President Nicolas Sarkozy has proposed raising the retirement age to 62, up two years. According to the World Bank, Hungary has raised its retirement age, while Poland has moved to reduce incentives for early retirement, and other nations have changed the way benefits are calculated.