It’s no secret that Social Security’s reserve fund is in danger. That’s only natural considering the program’s primary revenue source is payroll tax funds and more and more baby boomers are retiring these days. In the coming years, Social Security is expected to owe more money in benefits than it collects in revenue. If nothing is done to help the struggling system, there may be no choice but to cut benefits.
The prospect of potential benefit cuts scares many seniors, especially those who rely on Social Security as their sole source of retirement income. But benefit cuts could become a reality if lawmakers do not come up with a viable solution before the Social Security trust fund runs dry in about ten years. When that happens, eligible beneficiaries will receive less than 79 percent of the scheduled social security benefits they were promised.
Raise Retirement Age
A report by USA Today says some lawmakers would like to raise the full retirement age (FRA) for future beneficiaries. The thought is that bumping FRA from age 67 to age 68 could possibly prompt more people to stay in the labor force an extra year, thereby pumping more payroll tax revenue into Social Security.
Evidence shows that’s highly unlikely to happen. Social Security currently rewards seniors who delay their claims past FRA with an 8 percent annual boost to their benefits, up until age 70, but few beneficiaries take advantage of this benefit booster. In fact, most people start claiming benefits at age 62 — years before FRA.
This leads one to believe that raising the FRA will just put more pressure on younger workers, who will only see their golden years shrinking. Add to this the uncertainty of Social Security’s solvency and they will not be pleased to see their payroll taxes funding older generations’ retirement. Could this pit grandparents against grandchildren?
A Better Option
The Seniors Trust believes there is a better and fairer option. We believe the best way to raise additional revenue is by eliminating the income cap for social security tax.
The Social Security Expansion Act calls for lifting the cap on Social Security taxes to ensure that the wealthiest Americans pay a fairer amount in relation to their income. This year the annual wage cap limit is $147,000. Taxes are only collected on income up to $147,000 — anything above that is not taxed. So, someone earning $147,000 pays the same amount in taxes as someone making $500,000 or more. We say it’s time to “scrap the cap” to make sure everyone pays their fair share.
If the Social Security Expansion Act is passed, it could extend the solvency of Social Security for at least another 50 years. Please sign our petition to Congress urging lawmakers to enact this life-changing piece of legislation.