GAO has listed a series of options for changes in Social Security financing and benefits that largely repeat ideas raised in the past by others, although the GAO’s views tend to have a special weight on Capitol Hill because the agency is an entity of Congress itself.
In a recent report, GAO recapped the well documented strain that an aging population already is putting on the Social Security system, warning that the most severe impact is yet to come. Possible responses, it said, include:
Changing the replacement percentage of new retiree’s benefits to reduce benefits for all but the lowest earners.
* Indexing earnings used in the formula to prices instead of wages, which overall generally grow faster than prices. This would result in a proportionate reduction across all earnings levels but also could be tweaked so that only those above a certain income level would be affected.
* Indexing the benefit formula to reflect longer life expectancies, so that workers would have to continue working longer to get the same monthly benefits currently provided—in effect, to increase the retirement age.
* Basing benefits on the earner’s lifetime earnings record rather than just the highest 35 years, which would bring more lower-earning years into the equation.
* Reducing the spousal benefit amount and using some of that saving to improve benefits for survivors.
* Setting COLAs according to the “chained” consumer price index, which takes into account changes in buying patterns as prices for certain goods and services rise, and results in lower inflation counts.