The Debate Over Social Security Means-Testing

Social Security is an essential part of how people make ends meet in retirement. But many policymakers worry about its ability to keep paying full benefits in the coming decades. Some, including Schwab CEO Charles Schwab, have argued in the past that means-testing Social Security benefits could save the program in the long run.

In the following video, Dan Caplinger, the Fool's director of investment planning, looks at the means-testing debate over Social Security. Dan notes that means-testing is consistent with Social Security's initial intent to provide a baseline minimum income for retirees, and that those with higher incomes arguably don't need its protection. But he also points out that high-income recipients don't take a huge percentage of the program's overall benefits, discussing research [opens a PDF] from the Center for Economic & Policy Research that means-testing would have to hit middle-income recipients as well as the rich in order to make a big-enough difference. Dan concludes by talking about how income taxes on Social Security benefits are already similar to means-testing and that new means-testing proposals won't do enough to safe Social Security by themselves.

Find out how important Social Security really is
With low enough limits, means-testing could deprive millions of Social Security recipients of their benefits. To understand exactly what impact that could have on your retirement, be sure to read our brand-new free report, "Make Social Security Work Harder For You." Inside, our retirement experts run through how the program works, giving you a sense of what means-testing might take away from you. Click here to get your copy today.

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