Would There Be Cuts to Social Security?, Everyone knows that this year, 2020, is being a chaotic and troubled one in history due to Covid-19. But in America, the elections are coming in just a few days to decide the future of the USA, and who will rule the country for its betterment. Undoubtedly, it has been seen that the government in the USA is following many strategies to boost the economic growth of the country and to mitigate the loss made by the coronavirus crisis.
There is nothing new in saying that Social Security will be going to turn into a hot issue in the debate of this year’s election in the USA, as this program is currently dealing with an estimated $16.8 trillion funding shortfall in the coming 75 years all because of the Covid-19 crisis.
Would There Be Cuts to Social Security?
Each and every candidate who is going to present in the election this year for the betterment of America is showing their plans for different programs running in the country. But there are chances too, where people in America get misled by the information about any program, especially when we talk about Social Security.
Based on the reports, it has been shown that there may be a great cut in Social Security benefits in the next year and even in the future as well. And most of the candidates are supporting this plan. Is it true or not?
Let’s discuss the fact… there is some reality in the idea that the support has been given to cut Social Security benefits in the previous time. It is not about reducing the percentage of Social Security monthly benefits to more than 10 million beneficiaries. The primary idea behind this plan is to decrease the benefits paid in the lifetime.
Raising the full retirement age is one of them, which would not alter a thing for recent retirees or those employees who are just about to retire. But it would require the upcoming generation of employees to make a hard decision.
Possibly they have to wait longer to get their full payouts for a month, or they may accept a steeper decrease if they are going to claim early. Regardless of the thing whatever they decide, there would be a decline in the amount paid in lifetime Social Security benefits. Overall, it has been deduced that it is going to cut a Social Security benefit.
On the other side, it is also being reported that the assistance given to implement such plans to cut SS benefits may be a sign of fiction. Candidates are open to the idea of enhancing the Social Security program for the beneficiaries’ sake.
They are trying to cover the loopholes in the Social Security benefits by focusing on gathering additional revenue and the Social Security benefits for those recipients who are at greater risk due to any health problem, Corona might be one of them.
A four-pronged strategy
Everyone is trying to resolve the crisis in Social Security because of the coronavirus outbreak in the country. There is a new strategy that emphasizes four different aspects that will determine the truth behind cut on Social Security benefits in the coming year. Let’s go through them:
Boost Payroll Taxation on High Payees
This year, all earned income including salary and wages that may range from $0.01 to $137,700 is subject to a 12.4 percent payroll tax. While on the other hand, if the earned income is above $137,700, then it is exempted.
As far as the latest proposal is concerned, a doughnut hole would be made between 137,700 dollars and 400,000 dollars where income earned by an employee would keep on exempt. In the case of earning money that is above $400,000, the payroll tax will be applicable once again.
Increment in the special minimum benefit
It is also rumored that there would be a great increase in the special minimum benefit for those who are lifetime low-income earners that may range from 10 to 30 years of employment history. Based on the proposal, there would be a rise in the special minimum benefit to 125 percent of the federal poverty line.
Life disbursements for aged beneficiaries
Beneficiaries who live for a long time, will be entitled to get medical expenses and transportation charges. As they age, these benefits can shoot up. According to the new Social Security plan, there may be a call for an increment in the primary insurance amount or PIA up to 1 percent.
In this category, those beneficiaries will be involved who belong to the age interval of 78 to 82 years and this PIA can be increased to 5%. It states that this would show an unassertive pay hike for mature beneficiaries.
Adopting the CPI-E from the CPI-W
Last but not least, another proposal is to switch the CPI-W to the CPI-E. This might be a call for switching to the next inflationary chain of Social Security. CPI-W or Consumer Price Index for Urban Wage Earners & Clerical Workers would be swapped with the CPI-E or Consumer Price Index for the Elderly.
The reason is that CPI-W has a poor performance in tracking the expenses that elderly citizens are opposing. The CPI-E involves an index, which is accountable to track the expenditure of households with individuals who have aged 62 years or above this.
It can be seen that there is nothing in this plan that may show, there would be a great reduction in Social Security benefits or expenditures in any manner.
Now, the reality is in front of you. If you are an American citizen and saving for your retirement years in terms of Social Security taxes, then it would be better if you pay as much as $16,728 every year, then you will be going to see a great hike in your Social Security retirement income. And of course, with this amount of benefit, one can easily live his/her retirement years with complete peace of mind and satisfaction.