If you consider the 43 million retirees who live on their check of monthly benefits, there’s probably nothing more important than Social Security. As per data found by the Social Security Administration, it was found that 65% seniors depend on the program to receive more than half of their monthly income. In case the seniors don’t receive Social Security benefits, it is most likely that the rate of poverty among them would be considerably higher. However, if you’re a senior who is reading this post, you need to know that this program on which you rely is not static even though it has constantly played the role of a pillar for more than 7 decades.
The US economy and the Social Security are constantly evolving and both the recent beneficiaries and the working Americans can anticipate few changes in the years to come. Scroll down if you want to know the changes that you can expect by 2020.
Change #1: The retirement age will constant rise higher
As long as Social Security is concerned, there are no guarantees apart from the 2 facts that this program won’t ever go bankrupt as it is funded by payroll tax and that the full retirement age for the workers who are newly eligible will constantly keep rising until 2022. Now, what is your full retirement age? It is the age which is decided by your birth year and it is also the age when the Social Security Administration considers you eligible to get 100% of the retirement benefit. If you could until a month after crossing your full retirement age, the monthly payout will surpass 100%. Starting from 2017 to 2022, the full retirement age will receive a hike by 2 months with every coming year.
Change #2: The rich will owe more to payroll tax by 2020
Would you want to hear some news which will definitely make more than 90% of the American workers happier? The wealthy and rich will owe more in tax by 2020 and this has been found by the Social Security Administration. The payroll tax is seen to be the main funding mechanism of Social Security. When you’re employed by someone else, your employer should cover half of the payroll tax liability of Social Security. This rule clearly implies that the workers are bound to pay 6.2% tax on earned income while the self-employed owe the full 12.4%.
Change #3: There’ll be a decline in purchasing power of Social Security dollars
There is enough likelihood that the buying power of Social Security dollars will constantly keep reducing. As per analysis by TSCL or The Senior Citizen’s League, the buying power of Social Security dollars fell by 30% since the year 2000 and there are enough reasons that suggest that the trend of decline may slow down sooner or later. The Consumer Price Index for Urban Wage Earners and Clerical Workers is presently the only measure which is utilized to decide how much of inflation is there.
Change #4: Eligibility for benefits will get tougher
If you think you’re automatically entitled to the benefits of Social Security, you’re wrong as most people earn their way to receiving the benefits by the history of their work. When you actually want to qualify for retired worker benefits, you will require earning 40 work credits through your lifetime of work by the time you enroll yourself for the benefits. Now did you know that it is only possible to earn 4 work credits per year? So, you would need minimum 10 years of work history in order to become eligible for the benefits.
Therefore, when such changes were initially brought into effect, this would impact just 10 households but this figure is all set to rise dramatically by 2020.
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