quote:

Originally posted by Gustofer:

Ultimately, SS is not going away, nor is it likely to be reduced. I could see the full retirement age going up to 70 though.

Which is a reduction if you don't get to collect until older.

Congress has reduced SS and Medicare benefits numerous times using the "screw the rich, they don't need that much money" shield. There's all the "bend the curve" stuff they do, where higher earners during their working years get a lower and lower return on their contributions. And retirees who have more outside income from investments, who are also likely the same as the group that earned more while working, get a further reduction in payout via increased taxation under MAGI which started in 2008. Congress instituted the Required Minimum Distribution in 2003 which forces everyone to withdraw from their IRA and 401k whether they want to or not when they hit 73 or 75 years old. Which throws those who saved well while working into higher tax brackets, grabs more of their SS into being taxed, and can trigger IRMAA on Medicare.

They've already reduced the program several times without directly reducing the number appearing on checks that people were already receiving. Because the younger citizens increasingly want to take from "the rich", Congress will have safety in reducing the program by further penalizing those who were responsible earners and savers.

Inflation is another way to reduce SS without the checks themselves changing. But the purchasing power will decrease year after year.

quote:

Originally posted by parabellum:

quote:

Originally posted by chellim1:

quote:

I don’t think the fed gov will allow SS to run dry.

I think that's what Para is saying...

That's what I'm saying. The politicians and bureaucrats will do what they need to do to avoid the tar and feathers.

quote:

Originally posted by Gustofer:
Instead of acting on it in a responsible way, they'll just do some continuing resolution at the last minute so they can take full political advantage of the situation.

Yayyyy!!

quote:

Ultimately, SS is not going away, nor is it likely to be reduced. I could see the full retirement age going up to 70 though.

Yes, I can see that happening, and it may sound callous, but, taking all into consideration, it's the least offensive thing they could do. People are working longer, living longer.

I agree with all of this and it makes sense in all aspects.

quote:

Originally posted by Fly-Sig:
Which is a reduction if you don't get to collect until older.

Congress has reduced SS and Medicare benefits numerous times using the "screw the rich, they don't need that much money" shield. There's all the "bend the curve" stuff they do, where higher earners during their working years get a lower and lower return on their contributions. And retirees who have more outside income from investments, who are also likely the same as the group that earned more while working, get a further reduction in payout via increased taxation under MAGI which started in 2008. Congress instituted the Required Minimum Distribution in 2003 which forces everyone to withdraw from their IRA and 401k whether they want to or not when they hit 73 or 75 years old. Which throws those who saved well while working into higher tax brackets, grabs more of their SS into being taxed, and can trigger IRMAA on Medicare.

They've already reduced the program several times without directly reducing the number appearing on checks that people were already receiving. Because the younger citizens increasingly want to take from "the rich", Congress will have safety in reducing the program by further penalizing those who were responsible earners and savers.

Inflation is another way to reduce SS without the checks themselves changing. But the purchasing power will decrease year after year.

Exactly.

The easiest target is raising the level on which the payroll tax applies...

The next is indexing benefits based on other retirement income, which means reducing or at least taxing SS benefits on retirees with income from IRA's and 401k's.

I'll add...and this is a bit off topic, but everyone should have a Roth and contribute the max to it every year if possible.

quote:

Originally posted by 6guns:
I'll add...and this is a bit off topic, but everyone should have a Roth and contribute the max to it every year if possible.

+1
This is the last best remaining opportunity to grow wealth.

quote:

Originally posted by 6guns:
I'll add...and this is a bit off topic, but everyone should have a Roth and contribute the max to it every year if possible.

Been maxing out my Roth for about 15 years. Been preaching the gospel about them to everyone that asks.

quote:

Originally posted by 6guns:
I'll add...and this is a bit off topic, but everyone should have a Roth and contribute the max to it every year if possible.

Yes!

And in addition, those over age 50 should get educated on Roth conversions. Depending on their personal situation, including when they might retire (which frequently is years earlier than they expect), and when they start taking SS, doing conversions can substantially reduce future taxes and increase portfolio value.

There are a few years of opportunity that cannot be reclaimed after the fact.

https://www.newsmax.com/politi...dkt_nbr=010102uruca1

Some Republicans Open to Higher Taxes to Save Social Security

A handful of congressional Republicans are signaling openness to higher taxes as part of a deal to shore up Social Security, breaking with decades of GOP orthodoxy as the retirement program approaches a funding crisis.

Rep. Tom Cole, R-Okla., chair of the House Appropriations Committee, said he is willing to consider both raising the Social Security payroll tax rate and increasing the amount of income subject to the tax, reports The Washington Post on Tuesday.

"We've got too many people who say, 'Well, we have to stay within the current income level or stay at the current tax rate,'" Cole said. "I'm willing to look at the tax rate. I am willing to raise the amount of income through tax."

Cole's comments follow a proposal this summer from Sens. Bernie Moreno, R-Ohio, and Elizabeth Warren, D-Mass., to eliminate the cap on wages subject to Social Security payroll taxes, requiring high-income workers to pay the tax on all of their earnings.

Rep. Lloyd Smucker, R-Pa., has also said additional revenue is likely to be necessary.

"You'll probably have to do something on the payroll half of the money being paid into the system," Smucker told Roll Call.

The willingness among some Republicans to discuss taxes reflects the increasingly difficult financial outlook for Social Security.

The program's Old-Age and Survivors Insurance Trust Fund is projected to exhaust its reserves in the fourth quarter of 2032. Without congressional action, continuing income would be sufficient to cover only 78% of scheduled retirement and survivor benefits at that point, according to the Social Security trustees' 2026 report.

The combined Social Security retirement and disability trust funds are projected to be able to pay full scheduled benefits until the third quarter of 2034, when continuing income would cover 83% of scheduled benefits.

The approaching shortfall has complicated the traditional partisan divide over Social Security, with Republicans generally resisting tax increases while Democrats have opposed significant benefit reductions.

Charles Blahous, a former Republican public trustee for Social Security, said the shortfall has become too large to address realistically through benefit reductions alone.

"Twenty or thirty years ago," Blahous said, "you could come up with a straight-faced solution" based entirely on reducing future benefits.

Now, he said, "I don't think you can look at it with a straight face and not do all of the above."

The shift is already drawing opposition from conservative anti-tax advocates.

Grover Norquist, founder of Americans for Tax Reform, said Republicans should continue to reject tax increases and instead seek spending reductions.

"When Republicans say no to tax increases, they win. When they say yes to tax increases, they lose," Norquist said. "They don't get spending cuts at all, and they get smeared in the next election."

Cole said the political consequences of allowing Social Security benefits to be reduced could be considerably worse.

"I love Grover. But you've got to deal with Social Security," Cole said. "And believe me, you'll have a lot bigger problem if it goes bankrupt than you'll have keeping it whole, because people will feel cheated."

Social Security is financed primarily through a 12.4% payroll tax split equally between workers and employers. In 2026, the tax applies to the first $184,500 of a worker's earnings.

Moreno and Warren have proposed eliminating the cap, making all wage income subject to Social Security taxes.

"Why should a middle-class nurse pay a larger share of her paycheck than a wealthy corporate lawyer?" the senators wrote in a New York Times op-ed.

Cole said raising or eliminating the payroll tax cap "ought to certainly be on the table," but he also wants lawmakers to consider changes that could reduce future spending, including raising the retirement age.

Smucker has similarly suggested means-testing benefits so wealthy retirees receive less while lower-income beneficiaries are protected.

President Donald Trump has repeatedly warned Republicans against cutting Social Security benefits, but the White House has not endorsed a specific plan for closing the program's long-term funding gap.

Cole said he has encouraged Trump to pursue a bipartisan overhaul, calling a Social Security agreement a potential "crowning achievement" of his presidency.

The approaching shortfall has prompted lawmakers to consider creating a bipartisan commission to recommend changes, an approach Cole supports.

Congress has confronted a similar crisis before. In 1983, President Ronald Reagan and Democrat House Speaker Tip O'Neill reached a bipartisan agreement that included higher payroll taxes and a gradual increase in the retirement age.

quote:

Social Security is financed primarily through a 12.4% payroll tax split equally between workers and employers. In 2026, the tax applies to the first $184,500 of a worker's earnings.

I have no doubt they will raise the payroll tax AND the cap on which it is paid...

quote:

Smucker has similarly suggested means-testing benefits so wealthy retirees receive less while lower-income beneficiaries are protected.

But that would really piss me off.
The people who saved independently of SS (401k, IRA) and probably also paid in the most in payroll taxes would get their benefits cut while those who didn't save anything would not.

quote:

But that would really piss me off.
The people who saved independently of SS (401k, IRA) and probably also paid in the most in payroll taxes would get their benefits cut while those who didn't save anything would not.

Me too!!! And many many more!

They already have several means tests built in. They don't call it that, but that's what it is.

The first is "bending the curve", where those who earned more during their careers receive a lower percentage back than those who earned less. Since you earned more, I guess they expect you saved more and thus don't need it. That's a means test.

The second is taxing some of your SS check. Now this one hits middle income people too, not just high earners. The more you have of other income, the more of your SS gets pulled into your taxable income. Up to 85% of your SS can become taxable, and since that adds to your taxable income, it is taxed at a higher marginal rate. It effectively increases your tax bracket by 8.5% compared to if SS weren't taxed.

If you have capital gains in retirement, e.g. from a brokerage account, the more SS you get the more those capital gains may be taxed.

But wait, there's more! SS is part of the calculation for IRMAA. Thus you can get another tax triggered by your SS.

Yes, SS is already means tested. The more you have saved the more you get penalized by taxes on or because of your SS.

See? Everything's gonna be fine!

"Don't worry about a thing,
'Cause, every little thing is gonna be alright"

https://www.theepochtimes.com/...OvDj13CAzl2s0l5lw%3D

AARP Predicts Significant Social Security Payment Increase

If the projection holds steady, it would be the largest cost-of-living adjustment since 2022.

Senior citizens group AARP last week forecast a 3.6 percent increase in Social Security payments for 2027, citing current inflation data.

If the projection holds steady, it would be the largest cost-of-living adjustment (COLA) since the 8.7 percent increase that took effect for 2023 benefits. The adjustment that went into effect for payments sent out in 2026 was 2.8 percent.

The average monthly Social Security payment in July was about $2,086, and a 3.6 percent rise next year means retirees will receive about a $75 per month increase under AARP’s Sept. 11 projection. Social Security Disability Insurance recipients would receive an increase of $59 per month, and the average monthly benefit for a surviving spouse would rise by about $70 per month, according to the organization.

The 2027 COLA is set to be announced in October when the Department of Labor releases its consumer price index (CPI) figures for September. The next year’s COLA is determined by the CPI for urban wage earners and clerical workers, sometimes called the CPI-W, for the months of July, August, and September.

Noting that a number of older Americans use their monthly Social Security payments for large portions of their income, AARP Public Policy Institute official Rich Johnson said on Sept. 11 that “family budgets have been under increasing pressure because of rising prices.”

“The sooner that we can give them reliable information as to how much their benefits might [increase next year], the sooner they can start planning,” he said.

Tyler Bond, with the National Academy of Social Insurance nonprofit, said that the 2027 adjustment to Social Security payments “will be particularly important” for tens of millions of older Americans because of higher costs of living.

Similarly, the Senior Citizens League said in a Sept. 11 forecast that the COLA would be 3.5 percent, or 0.1 percent lower than the group predicted last month. The average benefit will increase by $67.90, the seniors league stated.

“No matter if the COLA announcement comes in slightly higher or slightly lower than our prediction, seniors will probably end up disappointed in the long run. The reality is that older Americans allocate their budgets differently than people still in the workforce, so inflation hits them differently,” Senior Citizens League President Shannon Benton said in a statement.

She said that the “CPI-W captures the experience of urban wage earners, which doesn’t represent the average senior’s budget.” Previously, Benton called for the COLA to be based on the CPI for elderly people, or CPI-E.
The Department of Labor on Sept. 11 said the CPI increased by 0.4 percent last month after edging up by 0.1 percent in July. In the 12 months through August, consumer inflation advanced by 3.4 percent.

The Social Security COLA will take effect starting with payments sent out on Jan. 1, 2027.

Woo Hoo! 3.6% that will really put a dent in my home and car insurance increases of 8% and 12%, as well as my medical insurance increases of 14%, groceries up 8%, gasoline up 20% (WA state), natural gas up 15%, and electricity up 20%.


Hell the entire year’s increase will just barely cover the costs associated with WA state’s new “permit to purchase” firearm scheme. $126 for the 5yr permit and background check, $40-$70 for the fingerprints, $350-$500 plus travel costs for required training, another $36 background check when you actually buy a gun, and then after all those checks and rechecks you STILL have a 10 business day wait to take possession. Actually, 15 day wait because the day you fill out the paperwork doesn’t count.


”im in the money, I’m in the money…”

Washington is actually outdoing California on gun BS.

I work in the demographic that has nothing but SS for income. They are all renters and their landlords will absolutely raise their rent by the COLA amount, come Jan. 2027.

quote:

Woo Hoo! 3.6% that will really put a dent in my home and car insurance increases of 8% and 12%, as well as my medical insurance increases of 14%, groceries up 8%, gasoline up 20% (WA state), natural gas up 15%, and electricity up 20%.

There's no way the COLA is keeping up with actual inflation.

An informal poll on a financial site showed most participants estimate inflation at 8%, given what they normally buy. Only very few thought it was anywhere near as low as the official rate.

For those of us retired, The official rate doesn't apply to our range of purchases very well. If you travel, airfare is up something like 24% over a year ago. Gas is up, so road trips are much more expensive. We don't buy the same basket of stuff that is in the inflation calculation.

Taxing high earners to help fund Social Security gains bipartisan attention — what it could mean for benefits

As Social Security faces a funding shortfall, some lawmakers have renewed calls to raise taxes on high earners to help shore up the program.

Proponents of the strategy, who until recently have all been Democrats, now include several Republicans.

In June, Republican Sen. Bernie Moreno of Ohio teamed up with Democratic Sen. Elizabeth Warren of Massachusetts to pen an op-ed in The New York Times that called lifting the Social Security payroll tax cap a “common-sense solution.”

Republican Reps. Tom Cole of Oklahoma and Lloyd Smucker of Pennsylvania also recently said in separate interviews that they would consider raising payroll taxes to help fund the program.

Changing how Social Security taxes are taken out of workers’ paychecks may help avoid benefit cuts, experts say.

In 2026, workers contribute Social Security payroll taxes on up to $184,500 in earnings.

High earners may pay into the program for just part of the year. About 83% of total worker earnings are currently covered by these taxes, according to the Roosevelt Institute, a liberal think tank.
How taxing high earners may help close the gap

Social Security may not be able to pay scheduled retirement payments as promised as of the fourth quarter of 2032 — about six years from now — according to an annual report released by the program’s trustees in June. At that time, 78% of benefits from that trust fund — which provides income to qualifying retired workers, their spouses and children, and survivors of deceased workers — will be payable, according to the trustees’ projections.

Combining the program’s retirement trust fund with its disability trust fund could make full benefits payable until the third quarter of 2034, when 83% of benefits would be payable.

Social Security faces a nearly $30 trillion, 75-year shortfall, the program’s trustees said in their June report, up from about $25 trillion the year before. That gap represents the program’s “unfunded obligation,” or the value of scheduled income minus costs, according to the report.

Just how much of that shortfall would be covered by lifting the taxable maximum depends on how the policy is structured.

Completely eliminating the Social Security payroll tax limit would cover 67% of the program’s 75-year solvency gap, according to the Roosevelt Institute. But if benefits were also increased, the change would instead cover 48% of the solvency gap, according to the think tank’s research.

Another option — permanently setting the taxable maximum at 90% of earnings — would address 28% of the 75-year solvency gap if benefits are not increased, or 22% if monthly checks go up, according to the Roosevelt Institute.

Eliminating the Social Security payroll tax cap for earnings above $400,000 was the most strongly preferred choice among 2,243 Americans age 21 and older surveyed in 2024, according to the National Academy of Social Insurance, AARP, the National Institute on Retirement Security and the U.S. Chamber of Commerce, with Greenwald Research. The survey was conducted Oct. 15, 2024, to Nov. 20, 2024, and had a margin of error of plus or minus 2.1 percentage points.

Another choice that was nearly as popular, according to the survey, was raising the payroll tax rate to 7.2% from 6.2% for both employees and employers.

Social Security advocacy groups such as Social Security Works and the Committee to Preserve Social Security and Medicare also back taxing high earners to help shore up the program.

It’s “almost unavoidable” that Congress will include changes to Social Security’s taxable maximum when it reforms the program, according to Tyler Bond, a senior fellow at the National Academy of Social Insurance, a nonprofit focused on economic security programs. Bond co-authored the Roosevelt Institute’s new research on how to fund Social Security’s shortfall.

About 6% of workers earn above the cap each year, Bond said. Only 20% of workers will ever earn above the threshold at any point in their career, he said.

“We’re talking about a fairly small segment of the workforce,” Bond said.

Social Security’s funding woes may generally be resolved through tax increases, benefit cuts or a combination of both. Another suggested proposal — raising the retirement age — would be considered a benefit cut.

“It’s really hard to just ignore the fact that scrapping the cap closes so much of the funding gap without needing to implement any other changes,” Bond said.

Some policy experts do not see raising the payroll tax limit as a silver bullet for Social Security’s funding woes.

Lifting the payroll tax cap would be the equivalent of implementing a 12.4-percentage-point tax hike on that currently exempt income, and would represent the largest tax increase since 1982, according to the Tax Foundation, an independent tax policy nonprofit.

“We have just not experienced that in the modern economy,” said William McBride, chief economist at the Tax Foundation.

Those high-earner taxpayers may react by working less or reporting less in taxable wages, McBride said.

The change would also impact the economy. For example, expanding the payroll tax cap to cover 90% of wages by setting the cap at $346,000 starting in 2027 and then indexing it to wage growth would eliminate nearly 900,000 jobs and reduce GDP by 0.7%, according to the Tax Foundation’s research.

“It would be even more extreme if we were to fully lift the cap and apply the payroll tax to all wages,” McBride said.

Proponents of raising or eliminating the payroll tax limit argue that a roughly 12-percentage-point increase on 5% of people will mean 95% get off scot-free, said Andrew Biggs, a senior fellow at the American Enterprise Institute, a conservative think tank based in Washington.

But the proposed hikes target those at the top who already pay higher marginal tax rates, he said.

“It’s a huge tax increase on a very small number of people with a lot of economic repercussions they haven’t thought of,” Biggs said.

Social Security’s funding dilemma comes as Medicare also faces its own funding shortfall. Medicare’s trustees projected in June that the Medicare Hospital Insurance trust fund may run out in the second quarter of 2033. At that point, just about 89% of the scheduled Medicare Part A costs may be covered.

Meanwhile, the nation’s debt recently surpassed $40 trillion.

A big payroll tax increase would leave the government “tapped out” for other tax hikes, according to Biggs. Medicare, Medicaid and the rest of the debt would fall on middle-class and lower-income people, he said.

Uncapping the payroll tax to pay for Social Security would be a significant tax hike for taxpayers in places like California, whose top marginal rate would go up to 63%, including income, payroll and state taxes, said Jessica Riedl, an economic studies fellow at the Urban-Brookings Tax Policy Center.

“There’d be no room to tax the rich for anything else,” Riedl said.

Moreover, if higher taxes paid into Social Security don’t come with higher monthly checks, that would sever the link between contributions and benefits, she said.

https://www.cnbc.com/2026/09/1...payroll-tax-cap.html