There are many plans to fix whatever one might think is wrong with our Social Security system.
Here are some of them - each one has been analyzed by the SS Actuary in a pdf form - each one has a pdf link so you can read them if you want.
SSA - Office of the Chief Actuary's Estimates of Proposals to Change the Social Security Program
Seems to me that adding things just complicates the financial problems that have to be solved for all of us - at least those of you that are planning on the system in its current form past about 2034 /2035 when the Trustees have determined depletion.
Understanding Social Security Depletion - AARP 06/03/2022 - How much longer will Social Security be ...
from the link ~
[Depletion] does not mean Social Security will no longer be around; it means the system will exhaust its cash reserves and will be able to pay out only what it takes in year-to-year in Social Security taxes. If this comes to pass, Social Security would be able to pay about 80 percent of the benefits to which retired and disabled workers are entitled.
That's an automatic cut - it is covered in the law as a failsafe. That auto action will hurt everybody on the system at that time. Of course, Congress can stop it by adding to the revenues. But it all gets rather complicated when those proposals {link above) contain not just revenue increases but also benefit increases and changes. There lies the rub and it makes it difficult for ANYTHING to get done by Congress.
So What I am saying, proposing is that Congress works on one thing at a time -
They can work just on the Revenues - the money coming into the program which funds it.
Those revenues come from three sources:
1. payroll taxes from employee / employers.
2. Taxes which Beneficiaries pay when they do their Income taxes and they meet the income level to tax 1/2 of their benefits.
3. The interest the US Treasury pays the SS Trust Fund on those "special treasuries" where SS funds that don't have to be paid out in monthly benefits stay until they are needed. Currently there is a balance of about 2.8 Trillion in these "special treasuries" but it is dwindling - look at the balance sheet - current through 2021.
SSA.gov - TRUST FUND DATA by year since 1957
There are ways that revenues can be increased - we could:
- raise the annual payroll tax cap on earnings -
- raise payroll taxes on employers or employees OR both
- increase the taxes paid on benefits - by raising the annual payroll tax cap, this would really start to happen when those (higher paid) workers begin to get their benefits.
- perhaps even raise the rate the US Treasury pays for those "special treasuries" -
By raising the annual payroll tax cap, the maximum Social Security benefits would have to be raised too. That's why the payroll cap is in existence - it correlates to the maximum benefit. But the SS benefits formula is progressive in nature - IOW, in comparison to what one contributes during their working year earnings, a person making a smaller wage gets more covered in their benefit than a person with a larger wage - this is due to bend points in the benefit calculation when they retire or become disabled. There would have to be added bend points in the benefits formula to create a new maximum benefit.
Now - back to my actual point - lets fix the system as it stands now by increasing the revenues. Build in a bit of cushion, get the revenue all squared away; get the system financially healthy within the current format and . . . . .
THEN if there are other benefits or higher benefits that we want to add into the program - Fine, then we just have to find a way to pay for them as they are passed.
Discussion ? Discuss the program. Just keep politics out of it and this won't get shut down by the AARP powers that be . . . .
All ears . . . . .
It's Always Something . . . . Roseanna Roseannadanna
