In addition, Weiss notes that both plans would be paired with an elimination of earnings penalties currently applied to recipients between early retirement and full retirement age whose earnings exceed a given threshold.
“If we tweak the system a little to allow people to reap the benefits of retirement gradually it would keep a lot more people in the workforce," Weiss says. "We wouldn’t be pushing so many people to retire when they aren’t ready or don’t need to.”
The second proposal, A New Bridge Benefit under Social Security, also gives workers flexibility to address their unique situations. This proposal, Weiss says, recognizes the reality that there are a lot of people claiming early because they don’t have a choice due to chronic health problems or the inability to find a job. They would have their benefits boosted so there would be no penalties between early claiming and normal retirement, she says.
The bridge benefit for workers ages 62 to 66 would be an add-on benefit to their early retirement benefits. It would fill the gap left by other cash and in-kind assistance programs by paying half of the difference between the worker’s full retirement benefit and the early retirement benefit at each age prior to the normal retirement age, starting at age 62 through 67.
A worker who retires at age 62 and currently receives benefits permanently 30% below their full retirement benefit would instead receive benefits 15% below; a 63-year-old retiree would receive benefits 12.5% lower rather than 25% lower; a 64-year-old would see a reduction of 10% rather than 20%; and a 65-year-old would have benefits 7.5% lower instead of 15% lower. At the current full retirement age of 67, they would begin to receive full benefits as if they had not claimed early.
“What’s nice about this proposal is that it also in the end is budgetarily neutral because it goes into other aspects of Social Security, removes some of the benefits from people who frankly don't need them and are just getting benefits for no reason, and uses those to pay for this so it doesn’t cost Social Security anything in the long term,” Weiss says.
The bridge plan is progressive, she says, with relatively larger benefits for lower lifetime earning workers, and would particularly benefit women, workers with less formal education and workers of color who struggle the most. The proposal calls for a capped amount so that it does not exceed the amount that would be received by a worker of the same age whose primary insurance amount (PIA) was based on 35 years of earnings equal to the average wage index (AWI).
For example, a worker who qualifies for the bridge benefit would receive 85% of her full retirement benefit as long as that amount is smaller than 85% of the PIA based on the AWI for that year. A qualifying worker would not receive an additional bridge benefit if her early retirement benefit is already greater than 85% of the full retirement benefit that someone would receive with 35 years of earnings equal to the AWI.
The groups' third offering, Creating a Federal Auto IRA and Enhancing Social Security Longevity Data, calls for creating a federal IRA with automatic enrollment to help workers without access to a 401(k) or similar plan for retirement. It also calls for disseminating enhanced longevity data to the public and sharing this information more widely and more frequently. Such data, the proposal noted, will help individuals who struggle to predict their own—and their partner’s—mortality to anticipate late-life health, employment or other shocks in order to better plan for their retirement needs.
The final proposal, State Supplemental Social Security, mirrors a proposal from Washington state where the state government offers a parallel system to Social Security. The Supplemental State Security programs, Weiss explains, would not only benefit many workers who lack access to—or do not currently participate in—a workplace-based retirement plan, but also the many millions of workers who have to retire earlier than planned and/or households with limited savings.