We have an unsustainable $38 TRILLION commitment with the current Social Security and Medicare plans. The problem with the current programs is that they cover everyone. Why not make Social Security/Medicare, et al like food stamps? You would have simple qualifications to qualify for Social Security/Medicare:
1) You must be 65 or older AND:
2) You can make no more than 25% above poverty level (about $18,200 for a family of two) OR:
3) Are disabled to the point it prohibits employment
Now, we have a sustainable designed to help the needy.
There has to be a transition to a fix this large, so if you are 50 or older, you would have two options:
1) Stay in the current system with current system payouts (which are quite weak)
2) Choose the 35-49 option.
You would receive what you have paid into Social Security in one lump sum. No interest gained, just what you have paid into the system. You can then invest in a 401K or some other option. These new retirement options would be named to you and would be transferred when switching jobs and would remain active even during times of unemployment (you would just not pay into them during that time). The bottom line is that personal investments tend to give much higher returns than the Social Security system; that's why rich people don't invest in government bonds other than as a diversification option. What about the few whose returns don't give back more? Easy; if they NEED it, Social Security is there.
If you are under 34, you will continue to pay into the system, but unless you are poor or disabled at 65, you would pay into a 401K instead of to the government. And since the Social Security/Medicare burden has been lightened, so will the taxes.
Taxes. Hmmm, that's my next post.