Just One More Reason Why We Need to Make Sure Social Security Remains Solvent
We’ve all heard the warnings — Social Security is in risk of running out of money. If nothing changes, its trust fund could be depleted in about 10 years. At that time, officials might need to cut benefits. We simply cannot let that happen. Social Security serves as the financial lifeblood for too many older Americans.
The Center on Budget Policy and Priorities found that Social Security provides a foundation of retirement protection for nearly everyone in this country. It cites a Social Security Administration analysis that reveals 97 percent of older adults (aged 60 to 89) either receive Social Security or will receive it.
Social Security Solvency
The problem is the number of retired people is quickly surpassing the number of working Americans. Social Security is funded by payroll taxes. All workers are required to pay a 12.4 percent Social Security tax on their earnings up to the annual wage cap limit — this year that’s $147,000. If you work for someone else, that’s split between you and your employer with each paying 6.2 percent. But, if you’re self-employed, then you have to pay the full 12.4 percent yourself. The important thing to keep in mind is that taxes are only collected on income up to $147,000 — anything above that is not taxed.
Scrap the Cap
Many people believe this is not fair. Under the current plan, a person earning $147,000 pays the same amount in taxes as someone making $500,000. A more equitable way to beef up the Social Security trust fund would be to lift the wage cap, rather than raise taxes.
It’s actually one of the tenets of The Social Security Expansion Act. This landmark piece of legislation calls for lifting the cap on Social Security taxes to ensure that the wealthiest Americans pay a fairer amount in relation to their income. The bill’s sponsors say doing so would “extend the solvency of Social Security for about 52 years to the year 2071.”
In addition to strengthening the Social Security program, the Social Security Expansion Act also calls for increased monthly benefits for seniors and enacting an annual cost-of-living adjustment (COLA) that is fairer to seniors and their unique spending habits.
Show Your Support
The Seniors Trust is working to pass The Social Security Expansion Act. Please, sign our petition to Congress and join us as we strive to improve the lives of senior citizens.
