Senator Chuck Hagel, a Nebraska Republican, has proposed his own fix for Social Security, which would include increasing the retirement age to 68 years old, the Associated Press reported.
Hagel's plan was unveiled Monday and includes a provision to allow younger workers to divert some funds to personal investment plans. The plan is based partially on life expectancy.
"This reality is daunting, but there is good news in all of this. The system can be fixed. It is within our power to preserve the social safety net of this nation," said Sen. Chuck Hagel, R-Neb., in a speech outlining his proposal at the University of Nebraska-Lincoln.
Like President Bush, Hagel supports allowing younger workers to put some of their payroll taxes into private investment accounts and under his plan, workers would be automatically enrolled into a personal account. They would have until age 25 to opt out and continue to receive all benefits from the traditional system, the AP reported.
Hagel's plan would not affect any workers over the age of 45, who would continue to benefit from the current system. For younger workers, Hagel's plan would:
- Raise the age that retirees could receive full benefits from 67 to 68, beginning in 2023.
- Allow people to continue to retire early, at age 62, but reduce benefits for those who choose to. Now, workers who retire early receive 70 percent of their full retirement benefits. Hagel's plan would provide early retirees with 63 percent.
- Add a measure of life expectancy into the formula used to determine Social Security benefits.
- Let them divert 4 percent of their pay into a personal account modeled after the Thrift Savings Plan for federal workers, with a choice of five index funds, the AP reported.
Social Security trustees predict that by 2018 the system will be paying out more to beneficiaries than it is bringing in from working Americans, causing the recent debate on the issue. Reforming Social Security is a top priority of the second Bush Administration. Hagel is considering a run for president in 2008, the AP reported.
"America's largest entitlement programs, Social Security, Medicare, and Medicaid, are on a trajectory that cannot be sustained," Hagel said. "The Social Security system is not in crisis today, but there is clearly a crisis on the horizon."
White House spokesman Scott McClellan said Monday that the administration welcomed "all ideas that are being put forward to solve the Social Security problem." He added that the president will continue to reach out to congressional leaders in hopes of passing legislation this year.