AARP has urged politicians to Take a Stand and put forth their plans to update Social Security.

It notes that Social Security is a "promise that's been kept for generations...But to keep that promise for future generations, Social Security needs to be updated for the 21st century. If our leaders don't act, future retirees could lose up to $10,000 a year. Every year, finding a solution grows more difficult. The only way to make progress is for our national leaders to make Social Security a priority and put serious proposals on the table."

Taking up that challenge is Congressman Sam Johnson, chairman of the Ways and Means Social Security Subcommittee. The proposals in Johnson's Social Security Reform Act of 2016 follow three main concepts: (1) modernize Social Security for the 21st century in which Americans are living longer, having fewer children and different family living arrangements, and working different types of jobs (including gig-economy jobs such as an Uber driver); (2) reward work by promoting incentives for people to stay in the workforce and provide a stronger benefit for lower-income lifetime workers; and (3) improve overall retirement security by ensuring that Social Security is permanently solvent, targeting benefit increases for those most in need, eliminating the Retirement Earnings Test, and treating all workers fairly by eliminating the Windfall Elimination Provision. (I wrote previously about the WEP.)

Johnson's plan also changes how the cost of living increase, or COLA, is determined. Under the Johnson plan, beginning in December 2018, the COLA would be based on a chain-weighted CPI. A chained consumer price index (C-CPI) takes into account how consumers change what they buy in response to changes in prices. For more information, I wrote a short MarketWatch article on the chained CPI in 2012. There are several other provisions that make Chairman Johnson's proposal worthy of consideration. For a list of these provisions, and an explanation of how the overall plan would achieve permanent solvency for Social Security, see the unbiased and nonpartisan write up of the proposal by the Chief Actuary of the Social Security Administration.

Social Security faces real and increasingly urgent financial challenges, which I detailed in a July 2016 MarketWatch article. Misunderstanding the critical state of the program's financial health will lead to grave consequences for all beneficiaries — both current and future. Updating the program to reflect the demographics and economic realities of today's society isn't only the wise thing to do, it is critical to ensure that Social Security remains solvent and fiscally sustainable so it can continue to provide retirement security for generations to come. Social Security must be modernized and improved, address the program's fiscal solvency issues, remove the disincentives to working later in life, and ensure the most vulnerable have a dignified and financially secure retirement.

Johnson has taken up AARP's challenge, and laid out a thoughtful and reasonable plan to strengthen Social Security. But let's be clear, he cannot tackle this immense task alone. The next move belongs to president-elect Trump and the new Congress. Will they Take a Stand?