During the 2016 Election, Donald Trump promised not to touch Social Security. He vowed to reduce the burden of government. But he said that Social Security and a few other benefits, would not be harmed.The fact remains, though, that Social Security is a bomb waiting to go off. For decades the government refused to reform it. They robbed Peter to pay Paul. Meaning that over time, there won’t be enough cash to pay the already low benefits.
With the landmark tax cuts passing this year, Social Security needs even greater reform. And that’s just what’s happening. Significant changes are being made to the program. But will it be enough? And do these changes hurt the many Americans who rely on the program?
From The Motley Fool:
For 2018, the basic structure of Social Security is the same in terms of how workers are taxed and how benefits are calculated and paid. However, there are a few notable changes to be aware of, such as the gradually increasing full retirement age and several thresholds and other Social Security figures that adjust over time with inflation…
The full or normal retirement age for Social Security benefits has been 66 years of age for some time now, but is set to gradually increase to 67 for Americans born after 1954…
Americans who will turn 62 in 2018 born in 1956 have a full retirement age of 66 years and four months, and those who will turn 63 in 2018 have a full retirement age of 66 years and two months…The Social Security Administration announced a 2% cost-of-living adjustment, or COLA, for beneficiaries, starting with the December 2017 payment…
In 2018, the maximum taxable earnings amount is rising by $1,500 to $128,700, meaning that high-income individuals will end up paying more in Social Security tax than they did in 2017.
As more Baby Boomers retire, SS becomes a greater burden. Contrary to what people believe, you didn’t “pay into it” over your working life. That money went to Social Security beneficiaries at the time. People who retire today do so off the backs of young people who are only entering the workforce.
The burden of Social Security will be felt on our children and grandchildren. Taxing can get so bad, that few will be able to earn a living. Plus, there just won’t be enough money to support everyone on Social Security. So changes have to be made, whether people like it or not.
Do these current changes go far enough? The government is pushing back the age to collect. Plus, it is requiring more people pay into the program. Perhaps that will help ease the burden of this huge program. Perhaps not.
We will have to wait and see. Significant changes like pushing the retirement age to 70 or raising the cap to $200,000 might be needed in the near future. They might, in the end, be unavoidable.
The full retirement age is increasing for some eligible seniors
The full or normal retirement age for Social Security benefits has been 66 years of age for some time now, but is set to gradually increase to 67 for Americans born after 1954.The reason this is important now is that the change has begun to affect people who are reaching the age of eligibility for Social Security benefits. Specifically, Americans who will turn 62 in 2018 born in 1956 have a full retirement age of 66 years and four months, and those who will turn 63 in 2018 have a full retirement age of 66 years and two months.
Here’s why this is important. Since most Americans claim Social Security before they reach full retirement age, this means that early retirement will have a more dramatic reduction. For example, if a worker with a full retirement age of 66 claims at 62, he or she would face a 25% reduction. If their full retirement age is 66 years and four months, the reduction percentage would be 25.8%.