“Without corrective action the U.S. retirement system is headed for a “train wreck,” according to John C. “Jack” Bogle, senior chairman and founder of The Vanguard Group.
He identified three pillars of the retirement system: Social Security; the defined-benefit plan and the defined-contribution plan.
“They are all in terrible shape,” Bogle told philly.com. “Social Security, I could fix it in five minutes. I’d change the cost-of-living adjustment, not to cheat the retired people, but to get a formula that was right. It would result in savings. That, in itself, would probably cure it.”
He also suggested other changes, including raising the maximum taxable earnings for Social Security “to, maybe, $140,000, $150,000.” This year the maximum is $113,000.
“Raising it would pour money into the Social Security system,” he said. “Just those couple of little adjustments are easy to conceptualize, easy to prove the economics of, and impossible to get through our Social Security system. We have a fundamental conflict in the way Social Security is done. It’s essentially younger people paying for the retirement of older people,” he said.
“The younger people are going to be unhappy with this because they have to pay more. The older people are going to be unhappy because they calculated benefits under the old, and I think, incorrect, system, and they will be getting less.”
As of June 30, 2011, 54.8 million people, or 17.6 percent of the U.S. population, were receiving monthly Social Security benefits, according to justfacts.com….”
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