he U.S. retirement system does not need a major overhaul or private accounts and can be stabilized through a series of smaller fixes, the nation’s largest lobby group for the elderly said on Wednesday.

The AARP, formerly known as the American Association for Retired Persons, said the amount of wages that can be taxed for Social Security should be raised from $90,000 to $140,000. The change could be phased in over about 10 years and would cut the projected shortfall by 43 percent.

The government should also diversify investments for the fund that pays out the benefit to include a total market index fund that would yield a higher return, according to the group. That could reduce the shortfall by about 15 percent.

“Social Security does not need a radical overhaul,” AARP Chief Executive Officer William Novelli said in remarks prepared for a National Press Club speech. “Reasonable steps such as these, including possibly adjusting benefits, are enough to strengthen Social Security for the long term.”

President Bush has called for a broad overhaul of the 70-year-old Social Security program, and has made adding private retirement accounts to the system his top domestic priority.

Bush has argued the program is headed into a financial crisis, a characterization Democrats, and some of Bush’s fellow Republicans, say exaggerates the problem.

AARP and others, including Democrats and some Republicans, oppose such privatization as too risky.

“Taking money out of Social Security payroll taxes for private investment accounts would worsen the solvency outlook rather than improve it, and could lead to large benefit cuts,” Novelli said.

Improvements should also be made to other private retirement accounts, including 401(k) and individual retirement accounts or IRAs, but such savings are needed in addition to Social Security, not instead of the program, he said.

Novelli also called for a series of changes to bolster Medicaid, the jointly funded federal and state health insurance program for the poor.

Health and Human Services Secretary Mike Leavitt has called the program, which serves about 52 million Americans, inefficient. The Bush administration’s budget request released on Monday called for a slowdown in Medicaid spending of $45 billion over 10 years.

Novelli agreed with some of the administration’s plans to reduce costs, including buying prescription medicines more cheaply and allowing patients to receive home care instead of more costly care in nursing homes.

Focusing on preventive care would also keep people healthier and save money, he said.

Some proposals have suggested capping the amount of federal money for Medicaid or turning part of the program into a block grant system, both of which the AARP opposes.