Wednesday, December 29, 2010

Retirement Planning—Saving Social Security

Those of us on the verge of retirement pay close attention to discussions of whether Social Security will go toes up in the near future. I believe I’ve stumbled upon a funding solution that will preserve Social Security for posterity.

My idea was inspired in part by the arguments over the extension of the Bush tax cuts. A key issue was whether the cuts should be allowed to expire for the very wealthy. There were differing opinions of what income marked the transition to that status. Some numbers thrown about were $250,000, $500,000 and $1 million per year. As a side note: these discussions always make me worry that I’m hovering dangerously close to poverty level.

The real key to my plan to save Social Security was modeled after the infamous donut hole of Medicare’s prescription coverage. We need to create a Social Security donut hole, but not on the receiving end of the equation—on the payment side.

With the current system, workers stop paying in when their income reaches $106,800. My plan will give rich folks a break for a donut hole of income running from $106,800 to, say, $1 million. (It’s not that I’m generous. I just don’t have the patience to argue about the threshold to super-wealthy.)

Earners once again begin paying Social Security taxes on income over $1 million. The political parties can fight over what percentage they should pay. Even if it’s less than the percentage paid by the lower income folks, on those ethereal salaries, Social Security will be fully funded for the next millennium. Now don't you all feel better?

While I’m on the subject of political parties fighting over things that could impact Social Security, let’s not forget the tax deal that Obama cut during the lame duck session of Congress. Democrats thought he caved too easily; Republicans thought they were tricked into supporting a stimulus package. Many pundits say they are both correct.

The December 12th edition of Inside Washington addressed this issue, and panelist Mark Shields caught my attention when he made this interesting observation. “The question about every conservative who comes to office is does he have compassion, does he have a heart. The question about every liberal leader is does he have a backbone?”

As I listened to this, the characters from The Wizard of Oz suddenly appeared before me. There was the Tin Man, lamenting his lack of a heart. Next to him, the Cowardly Lion wished for courage, which certainly sounded like a plea for backbone. It occurred to me that if Shields’ observation is correct, we need new symbols for our national political parties.

We should replace the elephant with the Tin Man and the donkey with the Cowardly Lion. This makes a lot of sense in the current climate. After all, our political conversations seem to have moved on down the road to Oz, and we can’t really be sure what we’ll find behind that curtain.

I wonder if I got rid of my ruby slippers when I was thinning out my closet...

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