HOLLYWOOD, FLA. How can we fix Social Security to be a strong and solvent system for the next 75 to 100 years? Author Brian Doherty outlined a couple solutions at the Bank Insurance & Securities Association conference here, which, although politically unpalatable, still offer lessons for advisors.
One idea is to eliminate the maximum salary threshold for FICA taxes, Doherty said. That maximum is currently $115,000, so any level of someones salary above that threshold is not subject to the taxes that pay for Social Security. If it were instead operated like Medicare, where all salary is subject to the tax, then Social Security would be fine for most of the next century. Doherty noted that only a small portion of the population (5%) make more than $115,000 so the vast majority of Americans would likely support a move to eliminate the maximum. Still, a political decision that alienates the highest 5% of earners is not likely anytime soon.
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