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Social Security Solvency In Question...Again

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Social Security Solvency In Question...Again

The Social Security and Medicare trustees’ annual report released Wednesday shows that Social Security will find its funds exhausted in by 2034.

What This Really Means

Social Security is divided into two trust funds: one for retirees and one for disability benefits. The “exhaustion” talk relates to the funds ability to pay 100 percent of the promised benefits.

By the year 2035, the funds are projected only to be capable of paying 77 percent of retiree benefits and 89 percent of disability.

Related Link: Working In Retirement: Starting The Conversation And A Few Things To Consider

And that date is for the two funds combined; taken separately, the retiree fund will last until 2035, but disability benefits will lose the ability to make full payouts in 2023. That’s two years earlier than expected, but still 11 years later than projected prior to passage of the Affordable Care Act.

Solvency Solutions

To fund the benefit payments fully for the next 75 years, America could do any one or a combination of the following:

  • Immediately raise the Social Security payroll tax from its current rate of 12.4 percent
  • Raise the limit on how much of an earner’s income is subject to the tax - currently only the first $118,500 of wages is taxed
  • Cut promised benefits by 16 percent

Candidate Comments

Neither of the current presidential candidates have offered ideas for a solution. Donald Trump simply promises not to curb social security spending, while Hillary Clinton will likewise only specify what she won’t do, namely cutting benefits for the middle class or raising the retirement age.

Posted-In: 2016 presidential election disability Donald Trump Hillary ClintonPolitics Topics Personal Finance General Best of Benzinga

 

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