Social Security Fixer-Uppers

The game ( http://www.actuary.org/socsec.asp) and the book ( http://www.bc.edu/centers/crr/fixit.shtml) cover somewhat similar ground, though sometimes posing different scenarios for benefit cuts or revenue increases, the two basic approaches to solving the problem.

For instance, both the game and the book zeroed in on the question of reducing the annual cost-of-living adjustment. The so-called COLA is designed to protect the purchasing power of Social Security benefits. In the game, players are given a yes-or-no option of whether to reduce it by half a percentage point. (I said no, because I'm looking forward to those increases when I start to draw Social Security.) The book doesn't suggest a specific figure, but it notes that the consumer price index, on which the COLA is based, usually rises faster than the prices most people actually pay. That's the same argument the game makes in favor of the cutback.

I had to make several other decisions in the game. I chose not to reduce benefits to retirees by 5 percent and not to curb benefits for those earning more than $20,000 a year before retirement. I also nixed an increase in the payroll tax to 6.7 from 6.2 percent for both workers and employers. That's a killer for low-income workers and also tough on small-business owners.

Now, what about increasing the wages on which you pay Social Security taxes? That level is set at $97,500.

Truth told, my first instinct was to eliminate the wage cap altogether. But as the book notes, even raising the cap "could undermine political support for the program among workers with the highest earnings." I decided to take the more political course and increase it by 25 percent. And with that second step, I was more than 95 percent of the way to closing the funding gap.

Next I had to face whether to tax Social Security benefits like pension benefits are taxed. Are you kidding? That would hit me.

What about including new state and local government workers under Social Security? Okay. Why should they have separate retirement plans?

Bingo! Social Security funding problem solved.

Okay, my solution may not be the perfect one. It may have more than a tinge of self-interest. As the game points out, keeping Social Security financially sound will require constant fine-tuning unless we build in automatic adjustments. My solution relied on one-time fixes.

But the point made by both the game and the book is clear. It's not answers that are in short supply. It's political will.