Social Security plans to cut benefits to retirees in 2033, when the trust fund reserves are expected to be depleted.Cuts could be significant, according to one report New analysis.
Unless the program is strengthened by 2033, the typical newly retired dual-income couple’s Social Security checks will be reduced by $17,400 a year, or $1,450 a month, according to a report by the bipartisan Responsible Federal Budget Committee. will be
A $13,100 reduction for newly retired couples with a single income earner, the report said. The analysis, based on current amounts, does not project an impact on newly retired single-income earners, but the Social Security Administration expects benefits to be cut by 23% in 2033 unless the program is strengthened. I am making a trial calculation.
These cuts could be devastating for the nearly 50 million older Americans who receive Social Security checks, with the Federal Budget Board responsible saying that bankruptcy would significantly increase senior poverty. I predict. Still, there are many proposals to solve the pressing Social Security funding shortfall by raising taxes, raising the retirement age, or a combination of both.
current monthly average benefit check About $1,800 for singles, according to the Social Security Administration.
“break the cap”
Some Democratic lawmakers and left-leaning policy experts say there is an easy solution. ”break the capwhich refers to the social security tax cap.
The cap, which has been a feature of the program since its inception in the 1930s after the Great Depression, means that no Social Security payroll tax applies to income above that level, and 6.2% for workers. , plus an additional 6.2% for employers. . The 2023 tax cap will be $160,200, and income above that amount will be exempt from payroll tax.
Critics, however, argue that this would put the burden of social security funding on low- and middle-income earners while giving high-income Americans a break. For example, a middle-income worker earning less than the $160,200 cap in 2023 would pay an effective tax rate six times that of a billionaire.
Supporters say removing the cap would impose a payroll tax on higher incomes, generate additional Social Security income, and stabilize the public finances.
raise the retirement age
But some Republican lawmakers and right-wing pundits oppose tax increases, proposing a higher retirement age instead.
Last year, some Republican lawmakers floated the idea of lifting restrictions. Retirement age up to 70 — from the current age of 66 to 67, depending on the year of birth — cites the “miracle” of increased life expectancy.
But critics say many cannot work until they are 70, due to health problems or other reasons. And even if older workers were able to stay in the workforce until they were 70, they would still lose their Social Security checks for three to four years as a result, which would still amount to a reduction in benefits. .
