I agree. The political optics of taking 23% out of someone's $1200/mo benefit are much worse than taking 30% out of someone who paid in the max for 35 years. Never mind that some people who paid the max for 35 years may be every bit as reliant on their SS as someone who paid the minimum for 40 quarters.
Prepare for the term "affluent retiree" to be twisted by the media to become a slur, in preparation for screwing over "affluent" retirees. As in: "The XYZ plan to save Social Security includes cuts to benefits for low income beneficiaries, while the ABC plan preserves benefits for lower earners, while taking more from affluent retirees who don't rely on Social Security. The ABCs say it is unfair to cut benefits for those who most need them, while the XYZs say that a 30% cut to affluent retirees is much larger in dollars, and penalizes those who paid in more to the system."
The political fights over this issue are going to be epic.
I think there are ways to solve the issues that are more nuanced and win win.
We also need to be grounded on what we actually think we are “owed” vs our contributions. For instance, most people do not consider that half of the money put into SS was contributed by their employer on their behalf, so not really their money. My understanding is that on average, about 15% of the SS proceeds received by an individual is their own money.
As far as changes I would make, raise the minimum retirement age to 63 over 10 years (3 month increments), and means test for waiting beyond FRA by extending the window out to 74 and reducing the amount of “bonus” SS payments for affluent individuals. The threshold for benefits calculation would start based off of your FRA payment at 67years 0 months, and at a reasonably high dollar amount to exclude lower income individuals that need to wait until 70 because they need the extra SS. So an example would go like this:
<$2750 @ 67, retire at 70 with no reduction
$2750-$3500, retirement extends to 74, no reduction (4%/year vs 8%)
$3501-$4000, retirement extends to 74, 25% reduction (3%/year vs 8%)
>$4000, retirement extends to 74, 50% reduction (2%/year vs 8%).
Obviously there is pro-rata calculations between these intervals, but this example presents the general concept.
This method seems to be fairest to all and only disincentivizes “affluent” people for waiting beyond FRA to claim.
I was also thinking about a permanent fix to SS and Medicare using an approach where retirement and medical accounts are started by parents for children at birth (“529-R” or 529-M”). Similar rules as apply to 529s now could apply. There would also be a “payback” feature during the adult child’s working life that would require some multiple of the initial amount to be paid back by the child to keep SS and Medicare solvent over approximately 60 years (based on start of program to eligibility for use of funds), while those programs are mostly “phased out”. There likely would always need to be some safety net which could be paid for by everyone in the form of a small dedicated sales tax (fraction of 1%).
Thoughts? BTW, I will either be in the top 1 or 2 groups, so this provision could impact me.