All [social security] benefits are based on something called the primary insurance amount. This amount, in turn, is based on a worker’s earnings, indexed to the growth in average real wages, for the highest 35 years of earnings…So every retiring worker gets to take advantage of overall economic prouductivity, pushing up the level of wages during the time in which the work was performed. This adjustment allows the purchasing power of benefits to grow over time…the purchasing power of benefits paid to today’s teenager are scheduled to be 60% higher than benefits paid to a typical worker who retired in 2001.
…If benefits were indexed to prices, however, Social Security would, at this very minute, be in balance over the long-term – the system would be permanently solvent. Not only would future revenues equal future costs, but there would be a surplus…
Did you get that right? Just stop boosting benefits.
That is by Susan Lee, from The Wall Street Journal Op-Ed page, November 23.