GOP presidential hopeful John R. Kasich offered a proposal Wednesday that would reduce initial Social Security benefits but would allow workers to invest in the stock market and possibly gain more than was cut.
Any proposal to cut Social Security benefits is politically risky because senior citizens regularly vote, but the Ohio congressman said some sacrifice is necessary to preserve the system.
Other Republican candidates, including Steve Forbes, former Vice President Dan Quayle and Sen. John McCain, have offered their own Social Security proposals focusing on allowing workers to invest in private retirement accounts.
But none of them has called for reducing future benefits. Kasich said his proposal was designed to ensure solvency without raising the retirement age or increasing payroll taxes.
He would base the future initial Social Security payments on the consumer price index, which reflects increases in prices, rather than the current formula that reflects increases in wages.
The result would be that the average worker beginning to collect Social Security in 2020 would receive almost $4,000 less in the first year of retirement than he or she would be expected to receive under the current formula.
Those workers could more than make up the difference by investing part of their payroll taxes in the stock market, Kasich said. His plan would allow workers now under age 55 to voluntarily divert some of their Social Security taxes into private accounts. The proposal would not affect current retirees or workers 55 and older.