Early Retirement

Brief Analysis #520 - Social Security and Progressive Indexing

President Bush has barnstormed across the country promoting Social Security reform. So far, the president has proposed two primary ideas: 1) Allow younger workers to prefund a portion of their retirement benefits by creating personal retirement accounts equal to 4 percent of wages, and 2) Use “progressive indexing” to reduce the growth in benefits for higher earners.

These two measures combined, if structured and administered properly, can provide retirement benefits equal to what workers are scheduled to receive from the current system, while significantly reducing Social Security’s long-term debt.