The problem I see with means testing is that it turns SS into another welfare program, and I don’t think that is politically viable.
I agree we have a tiger by the tail. But we are the richest, most powerful, and in my opinion, the best country in the world. I am sure we can find some solution that takes care of Americans now and in the future.
Also your chart is a little different, and better, than the one I found.
Medicare is being means tested. The current formula to determine SS benefits is somewhat means tested already. It is just a matter of adjusting the formula, something that Fred Thompson spoke about.
Earnings from a worker's 35 highest-earning years are tallied at age 62 and indexed for inflation, resulting in the AIME. The Social Security Administration determines the primary insurance amount, or PIA, by applying a PIA formula to the AIME.
The AIME is "divided into three segments, called bend points (which are adjusted each year for inflation), giving you the worker's PIA," says Scott.
For example, assume you have a 62-year-old born in 1950 whose total indexed earnings over his 35 highest-earning years were $2 million. The $2 million divided by 420 months gives the worker an AIME of $4,762.
The first bend point, $767 of the AIME, is multiplied by 90 percent. The difference between $767 and the second bend point of $4,624 ($3,857) is multiplied by 32 percent. The amount more than $4,624 ($138) is multiplied by 15 percent. These percentages and limits are set by the SSA.
So let's apply this formula to find out what the Social Security benefit would be at full retirement age.
The first bend point gives you a benefit of $690.30 ($767 x 0.9 = $690.30).
The second bend point gives you a benefit of $1,234.24 ($3,857 x 0.32 = $1,234.24)
The third bend point gives you a benefit of $20.70 ($138 x 0.15 = $20.70).
The sum of all of these amounts is $1,945.24. Because amounts are rounded down to the next-lowest dime, this worker's PIA, which is the amount the worker would receive at full retirement age (66), is $1,945.20.
You could change the percentages and bend points to give low wage earners a bigger benefit and decrease the benefits to higher wage earners.