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4 Ways to Strengthen Social Security

Millions rely on Social Security for their retirement income, but the program is under financial threat. With long-term benefits at risk, many proposals have surfaced to try to shore up Social Security's finances.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at four of the more popular proposals to strengthen Social Security. Dan notes that retirement ages are already on their way up to age 67, but some believe that 68 or even 70 would more accurately reflect life expectancies. Means-testing Social Security to take away or limit benefits for upper-income recipients is especially controversial, raising disagreements about the nature of Social Security either as a safety net or as a pension benefit for all. Dan notes that Social Security payroll tax rates haven't risen in almost 25 years, making a rise in the current 6.2% rate a possibility. Finally, Dan looks at proposals to raise or eliminate the current wage base limit of $117,000, citing similar moves to Medicare taxes that boosted revenue. Dan concludes that none of these solutions is a slam-dunk winner among those looking at the problem, and all of them might well be up for debate for years to come.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 23, 2014, at 12:50 PM, deckdawg wrote:

    For many, many, many years the social security tax collected in excess of what was needed to pay current benefits was simply shoveled over into the general fund to be spent on who knows what.

    Why not just reverse that formula? Shortfalls in funds needed to pay benefits could simply be made up by shoveling money back over from the general fund into the social security bucket.

    Seems fair.

  • Report this Comment On June 30, 2014, at 9:29 PM, DanFPilot wrote:

    The Social Security tax rate is 12.4% not 6.2% of the first $117,000 of earned income. Anybody who has been self employed or a independent contractor knows this. Even as a mere employee, I know that I'm paying 12.4%. The difference being that my employer pays the additional 6.2% this on my behalf just like pay my health and disability insurance. Anyone who thinks they are only paying 12.4% is naive.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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