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social security history

Some Americans are already feeling anxious about the state of the Social Security program. Will there be enough for you to live on in your golden years? Will it be enough? Research shows that the Social Security program is in bigger trouble than we anticipate (see my previous blog).

Possible Solutions For Social Security

A 2014 study by the National Academy of Social Insurance (NASI) looked at potential solutions addressing Social Security’s funding shortfall in terms of their impact (based on current actuarial data) and public opinion.

The most popular revenue-enhancing changes — “strongly” or “somewhat” favored by more than four out of five survey respondents — were to gradually raise the FICA payroll tax rate (paid by both workers and employers) from 6.2% to 7.2% over 20 years, and to gradually eliminate the taxable earnings cap over 10 years so that all earnings would be taxed.6

In 2015, workers’ earnings up to a maximum of $118,500 are subject to the payroll tax; the earnings cap is indexed annually for inflation. Raising the taxable earnings cap to $230,000 (which would cover 90% of all earnings by U.S. workers, a target set by Social Security legislation) would reduce the funding gap by 29%. Eliminating the earnings cap altogether would reduce the gap by 74%. Gradually raising the payroll tax would address about 52% of the shortfall.7

A majority of survey respondents oppose benefit reductions, such as reducing or eliminating benefits for high-income beneficiaries, raising the retirement age, and reducing the cost-of-living adjustment (COLA). In fact, 70% to 80% of respondents favored potential benefit increases, including raising the COLA, raising benefits for those who are 85 and older, reinstating survivor benefits for college students, and raising the minimum benefit. Of course, any benefit enhancements would only increase the deficit and would have to be offset by revenue increases.8

SSA-logo These reforms could work with the current Social Security system, but some legislators have suggested a more fundamental shift toward privatization ­— allowing younger workers to divert some or all of their payroll taxes from Social Security to private accounts. However, this approach would increase the current Social Security deficit, and it raises questions about the long-term security of a private savings program.

Source:
6–9) National Academy of Social Insurance, 2014

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM Don’t rely solely on Social Security for your retirement income. It’s not a safe move.  Let me help you establish SAFE ways to ensure you reach your retirement goals.
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