Social Security changes recommended by the co-chairs of the National Commission on Fiscal Responsibility and Reform (NCFRR) on December 1, 2010 include: extending coverage (to uncovered state and local employees); three benefit reductions (affecting the benefit formula, cost of living adjustments, and retirement age); two benefit increases (a new special minimum and a 5 percent boost for longtime recipients); and a revenue increase (lifting the cap on taxable wages). In addition, the recommendation to lower personal income tax rates would reduce revenues to Social Security funds from the taxation of benefits.
Bend Points in 2010*
|
Current Law
|
Proposal
|
$0 to $9,000
|
90%
|
90%
|
$9,000 to $38,000
|
32%
|
30%
|
$38,000 to $64,000
|
10%
|
|
$64,000 to $107,000
|
15%
|
5%
|
>$107,000
|
n/a
|
|
75 Year
|
75th Year
|
Cover newly hired state and local workers after 2020
|
8%
|
0%
|
Reduce benefits above the mean by modifying PIA factors to 90%|30%|10%|5% by 2050
|
45%
|
51%
|
Reduce cost-of-living adjustment (COLA) by switching to chained CPI
|
26%
|
17%
|
Index normal retirement age (NRA) and earliest eligibility age (EEA) to longevity so that the NRA gradually increases to 68 by about 2050 and to 69 by about 2075, and the EEA to 63 and 64 in same years; also direct SSA to create “hardship exemption”
|
18%
|
30%
|
Provide special minimum benefit of 125% of poverty for an individual with 25 years of work; index minimum benefit level to wage growth
|
-8%
|
-6%
|
Enhance benefits by 5% of average benefits (spread out over 5 years) for individuals who have been eligible for benefits for 20 years
|
-8%
|
-6%
|
Gradually increase taxable maximum to cover 90% of earnings by 2050
|
35%
|
22%
|
Allow retirees to collect half their benefits at a time, including option to collect the first half at age 62
|
-
|
-
|
Personal income tax changes – preliminary estimate of impact on Social Security revenues from taxation of benefits
|
-8%
|
-10%
|