as the Social Security Administration (SSA) runs low on money, the estimated date it would affect the reduction, was moved to 2034, only 13 years later. The reduction date would be when Social Security is forced to cut benefits by 20% due to a lack of funds.
The date was pushed forward because of declining tax revenues as a result of coronavirus-induced unemployment and labor shortages. With fewer people paying income tax in 2020, funding for the Social Security system declined while it continued to provide benefits.
Because Americans continue to pay into Social Security through their income taxes, the SSA is not projected to run out of funds, but rather minimize benefits to continue operating as older Americans reach retirement age. will need to be reduced by 20%.
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Congress’s inaction could result in massive pay cuts
Congress is working to prevent profit cuts by starting its new bill, Social Security 2100: A Sacred Trust. Bill, introduced in the House of Representatives The first, by Representative John Larson (D-Conn.), would be pushed forward the date when the SSA would be required to cut benefits until 2038, giving more time for the administration to find a permanent solution.
it will also Provide an average increase of about 2% to all beneficiaries and increase payroll taxes subject to Social Security taxes, raising the maximum taxable limit to $400,000 instead of today’s $142,800.
The bill has 194 Democrats cosponsors and will combine existing Social Security trust funds, including Old-Age and Survivors (OASI) and the Disability Insurance Trust Fund (DI), into a single fund to ensure that all benefits are paid. Will go
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Inflation guides Social Security payments — until it does
social security paychecks set to increase The largest percentage in nearly 40 years in 2022, according to the SSA. Next year, benefits will increase by 5.9% for about 70 million Americans, the highest increase since the 7.4% increase in 1982.
This large increase is due to rising inflation, which grew 5.4% annually According to the latest report from the Bureau of Labor Statistics (BLS) in September.
Under the new Social Security bill, the annual cost of living adjustment (COLA) formula will be adjusted to optimize the CPI-E formula.
“This provision will help senior citizens who spend a major part of their income on health care and other necessities,” said Larson. said. “Improved inflation protection would especially help older retirees and widows, who are more likely to rely on Social Security benefits as they age.”
If Congress doesn’t reach an agreement related to Social Security before 2034, inflation levels won’t matter because benefits are reduced by about 20%. Payments would be forced to be determined by the level of inflation and the funds available for administration rather than by necessity.
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