WASHINGTON — Members of Congress, business leaders and scholars proposed Tuesday a plan to save the Social Security system from collapse in the 21st century by raising the retirement age to 70 and investing some funds in stocks, bonds or government securities.
Members of the National Commission on Retirement Policy said they hoped to draft legislation based on the plan within two weeks for submission to the next Congress in 1999.
To reflect increasing life expectancy in the United States, the plan would raise the normal retirement age from 65 to 70 by the year 2029, adding two months every year. Early eligibility age would increase from 62 to 65 by the year 2017, also by adding two months a year.
The detailed plan tries to strike a balance between economic conservatives who favor privatizing Social Security and liberals who say that with stock market fluctuations, millions of retired people risk poverty.
The problem is that even under the optimistic scenarios in fashion during the current economic boom, the Social Security system will run out of accumulated savings in 2032.
Under the existing rules, a declining number of working people will no longer pay enough into the system to cover the benefits paid to the growing number of retired people.
The plan would take two percentage points from the 12.4% payroll tax and invest that money in individual savings accounts in the expectation the return will be higher than the average 2.7% Social Security has produced.
"The goal is to have people more involved in their own savings. . . . Some people say it's too risky and we can't afford it. I would suggest we can't afford not to do it," said Sen. John B. Breaux (D-La.), one of four congressional commission chairmen, who came from both major parties.
The investors would have a choice of low- to medium-risk instruments: indexed stock funds linked to the Wilshire 5000 or the S&P 500, a bond index fund, a blended index fund including stocks and bonds, or a government securities fund.