I recently came across an article from BenefitsPro written by Paula Aven Gladych that delves into the current condition of the Social Security benefit program, the proposals to fix it and the politics that may prevent any real changes.
* The U.S. Social Security Administration’s 2012 annual report for Social Security reiterated that the program “cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers.”
* Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable earnings will grow rapidly from 11.3 percent in 2007, the last pre-recession year, to roughly 17.4 percent in 2035, and will then decline slightly before slowly increasing after 2050.
* Increasing the payroll tax cap is another proposal that would aid the Social Security funding gap. Currently, the tax applies to annual earnings up to $110,100. Anything earned above that is not taxed for Social Security. Raising the cap to cover a higher percent of total earnings would help alleviate Social Security’s funding gap. Those in favor of the increase say it wouldn’t affect too many people because only 6 percent of the population make more than $110,100 a year, and it would help keep Social Security strong for years to come.
* Other proposals include eliminating the payroll tax cap, reducing benefits for higher earners, increasing the pay- roll tax rate, taxing all salary reduction plans and other options.
Read the full article“Saving Social Security- Who do you blame? And who do you believe? | BenefitsPro”.