They should determine a baseline annual income that social security will pay at retirement. Next, determine a level of savings that would be needed to generate said level of annual income assuming an annual return on that savings of 6%. So say they were to set the baseline at $30,000:
30,000 = 0.06x
x = 500,000
So if someone has $500,000 in assets (401k, house, etc) that can in theory generate enough income so as to match that which would be paid by social security, they should not receive any social security benefit. Say someone has savings of $400,000, their social security benefit should only be enough to bring them up to the baseline annual requirement. So in that case.
x = 0.6(500,000-400,000)
x = 6,000 (or 500 per month)
You basically set a baseline income, determine if the retiree is already there or not, and then apply benefits as needed. There is no reason we should be sending social security checks to people that are millionaires. The same principle should be applied towards medicare as well.