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Congressional proposals to bolster retirement security

WASHINGTON—Here are some of the ideas being considered in Congress to shore up retirement security:

SOCIAL SECURITY

_Creating personal accounts. Not only the kind proposed by President Bush, which would be financed by diverting Social Security taxes. These alternative accounts could be financed or subsidized with other tax dollars. Under one proposal, a couple earning $30,000 could contribute up to $500 a year and receive a tax credit of up to $1,500. Those making more would receive smaller tax credits.

Any tax subsidy would force government to raise other taxes, cut spending or borrow more.

_Cutting benefits. Bush proposes to reduce promised benefits for those making more than $25,000 a year. Benefits would still rise, but at a slower rate than now promised by law. Democrats lambaste the cuts as too tough on the middle class. Actuaries say such cuts could solve 70 percent of the system's cash shortage.

_Raising the retirement age. Congress could accelerate the rise in the retirement age at which full benefits are available, now scheduled to reach 67 in 2027. Or they could raise it further. Advocates say that makes sense because people are living longer. Critics say it would hurt those who do physical labor, such as construction and factory workers, whose bodies might not stand the additional strain at the end of their working years. One study by AARP showed that raising the age to 70 over the next 78 years would solve 38 percent of the solvency problem.

_Raising taxes. Bush rules out raising the tax rate. But some of those angling for a deal propose taxing incomes over $90,000, the level at which taxes now stop. Among them: Sen. Lindsey Graham, R-S.C., one of the architects of the centrist deal that broke a Senate logjam over federal judges; Rep. Robert Wexler, D-Fla., one of the few Democrats to break his party's gag rule on alternative Social Security proposals; and Robert Pozen, a Boston investment manager whose proposal for lower benefits inspired Bush.

Raising the cap to $140,000 over 10 years and applying the full tax would raise taxes for about 6 percent of taxpayers and solve about 43 percent of the shortfall.

PENSIONS

A new proposal from House Republicans would require pension funds to be fully funded and raise insurance premiums paid by those funds to the Pension Benefit Guaranty Corp. Democrats say the higher premiums would drive more corporations away from pensions.

OTHER RETIREMENT SAVINGS

_Raising income limits for tax-sheltered savings. Pozen urges abolishing the limits on Roth Individual Retirement Accounts, currently off-limits to married couples with adjusted gross incomes above $160,000.

_Simplifying. Rep Rahm Emanuel, D-Ill., proposes merging 16 different parts of the tax code that cover savings for retirement.

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(c) 2005, Knight Ridder/Tribune Information Services.

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