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Successful proposals to achieve Social Security solvency and adequacy should adhere to the following principles. These principles should guide any updates to Social Security.
The Old-Age, Survivors, and Disability Insurance Trust Funds should maintain a minimum reserve of one and a half to two years as a cushion against an economic downturn.
AARP supports retaining wage indexing of both the Average Indexed Monthly Earnings and the bend points used in the formula for the Primary Insurance Amount.
If changes are made to Social Security that extend the life of the trust funds, Congress could authorize the investment of a portion of the Social Security reserves in investments
Some proposals for Social Security’s long-term solvency would base the receipt of Social Security benefits on the income people have outside of Social Security.
The receipt of Social Security benefits should continue to be based on earnings from work covered by Social Security.
Recipients of Social Security benefits generally receive an annual cost-of-living adjustment (COLA).
Automatic cost-of-living adjustments (COLAs) for Social Security benefits should continue.
As people consider retirement, they must decide when to claim their Social Security benefits. Their basic benefit amount is based on a predetermined benefit formula.
Any further increases to the full retirement age should be conditioned on adequate protections for those who have difficulty postponing retirement.