TABLE 6-1 Four Illustrative Social Security Options: Overview

Question of Effects

Option 1

Option 2

Option 3

Option 4

How is sustainable solvency achieved?

Reductions in the growth of benefits only

2/3 benefit-growth reductions;

1/3 payroll tax increases

1/3 benefit-growth reductions;

2/3 payroll tax increases

Payroll tax increases only

General Reductions in the Growth (under Current Law) of Monthly and Lifetime Benefits

Does the option increase the future age for retirement with full benefits and for early retirement?

Accelerate by 5 years the scheduled increase in the full-retirement age, to 67, and then increase retirement age with longevity. Similarly for early retirement.




Does the option change the preretirement calculation of monthly benefits?

For the top 70% of wage-earners in the retirement program: reduce the rate at which overall wage increases raise monthly benefits.

For the retirement program: a different form of the change for Option 1.

For the retirement program: a milder form of this change.


Does the option change the cost-of-living adjustment to monthly benefits in retirement?

Use a new price index that usually grows somewhat more slowly.




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