How Recent Changes to Social Security Affect You…
…and your wallet
UPDATED: July 27, 2020 – According to an AARP trustees report released on June 22, 2016, it is projected that greater than 60 million beneficiaries will receive a minuscule 0.2% cost of living adjustment (COLA) in 2017, while at the same time a percentage of Medicare recipients might be facing some steep premium increases. The last word on this possible increase will be announced in October, but it’s possible that if the inflation rates fall, then beneficiaries will not get even this small bump in payments (estimated to be $2.50 more per month), as in 2016.
Cuts to Social Security Benefits are scheduled to begin this year
This year there are scheduled for benefits to be cut. Between 2000 and 2005 the age of retirement rose to 66. The age of retirement will rise to 67 between 2017 and 2022. What these statistics mean in practical terms is that any 62 year old worker who claims early benefits in 2022 is looking at an annual benefit reduction of 30% in their lifetime.
To focus on this more, if the 30% reduction started in 2017, a 62 year old worker who had a $30,000 annual income would see his benefit shrink down to slightly less than $12,000 a year, which puts that worker in the poverty level.
On the Medicare front, in 2016, a $36 annual surcharge (lasting for 5 years) started for beneficiaries of Medicare in the 2nd to 5th income bracket. This is in addition to another increase of 14.4%. Beginning in 2017, the remaining 70% of retirees in the 1st income bracket will begin to pay the $36 annual surcharge.
Social Security Funds to last less than 20 years
Congress and the government need to start addressing the Social Security and Medicare payments as soon as possible. It is projected that the trust fund reserves for Social Security will run out in 2034, and Medicare’s Hospital Insurance fund is scheduled to run out of money in 2028.
According to the Wall Street Journal, over 49 million Americans receive retirement benefits from Social Security, 10.8 million receive disability benefits, and a whopping 55.3 million Americans are covered by Medicare. Will all these hard-working and disabled seniors be pushed farther and farther into poverty in 2017?
In other news, the Social Security Administration announced on June 22, 2016 a projected increase of its wage base to $126,000 in 2017, which is an increase from 2016’s $118,500. Any wages earned over this wage base will not be subject to Social Security tax. It is crucial that all American wage earners and Social Security benefactors remain vigilant, and make sure to vote for those politicians who are aware of the dire situation facing Social Security benefits, and who will work to make sure American wage owners can retire without adding to the ranks of citizens living below the poverty line.
From The Expert
Richtman, the chair of the National Committee to Protect Social Security and Medicare, cautions that the measure of inflation used by the government – the Consumer Price Index for Urban Wage Earners and Clerical Workers – hasn’t taken into consideration the increases in health care costs faced by older Americans. Although Social Security benefits have risen by 43% since 2000, the average expenses of seniors have risen 75.3%.