Book contents
- Frontmatter
- Contents
- Acknowledgments
- 1 Funding Social Security: An Introduction
- 2 Funded versus PAYGO Social Security
- 3 Funded versus Privatized Social Security
- 4 Funded versus PAYGO Social Security with Individual Accounts
- 5 Funded versus Means-Tested Social Security
- 6 Questions and Answers
- References
- Index
5 - Funded versus Means-Tested Social Security
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- Acknowledgments
- 1 Funding Social Security: An Introduction
- 2 Funded versus PAYGO Social Security
- 3 Funded versus Privatized Social Security
- 4 Funded versus PAYGO Social Security with Individual Accounts
- 5 Funded versus Means-Tested Social Security
- 6 Questions and Answers
- References
- Index
Summary
Means testing is a very different approach to Social Security reform. With means testing, retirees who have sufficient “means” – income or wealth – would receive little or no Social Security benefit; the Social Security benefit would be smaller, the higher the income (or wealth) of the retiree. The report of the Bipartisan Commission on Entitlement and Tax Reform (1995), created by President Clinton and headed by Senators Kerrey and Danforth, gives serious consideration to means testing. Means testing may be viewed as an alternative to funding Social Security because each attempts to bring Social Security into long-run financial balance. A key difference is this: The higher a worker's dollar wage and payroll tax, the higher is his dollar retirement benefit with funded Social Security (and current U.S. Social Security), but the lower is his dollar retirement benefit with means-tested Social Security.
THE CASE FOR MEANS TESTING SOCIAL SECURITY
Advocates of means testing Social Security assert that Social Security pays benefits to affluent retirees who “don't need it” and that the Social Security system can be brought into balance by reducing benefits to the affluent. From this perspective, a retiree who has sufficient means should receive little or no Social Security benefit.
One of the commissioners of the Bipartisan Commission on Entitlement Reform, Peter Peterson, holds this view.
- Type
- Chapter
- Information
- Funding Social SecurityA Strategic Alternative, pp. 147 - 158Publisher: Cambridge University PressPrint publication year: 1999