Video: Tommy Says He Would Cut Social Security Benefits by Changing Indexing Rules | WisCommunity

Video: Tommy Says He Would Cut Social Security Benefits by Changing Indexing Rules

In an August meeting with the Journal Sentinel, Tommy Thompson was asked if he supported Eric Hovde's plan to extend the solvency of Social Security by cutting benefits for the wealthy, (AKA means testing).  Thompson responded, "I'm not ready to go into means testing Social Security," but that he would be willing to cut the benefits of the lower and middle class wage earners by changing the Social Security indexing to actual earnings:   

The first you have to, you have to... just by changing the indexing to what is actual indexing, your gonna save a lot of money and be able to extend Social Security in its current shape alot longer than what it is right now. And that's what I would be advocaing. 

So what exactly is Tommy saying?  First, a on how Social Security benefits are calculated from the Social Security Administration (SSA): 

Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount” (PIA). This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth.

What Tommy is bluntly saying is that if you didn't adjust actual earnings to "account for changes in average wages," and instead simply used actual earnings "your gonna save a lot of money" because outgoing benefits would be cut!

Here's the video:

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Published

October 25, 2012 - 12:39pm

Author

randomness