Learning about these issues is an important part of your retirement plan, as is voting according to who you see offering the best solutions. Social Security is efficient, spending slightly more than half a cent out of every dollar paid out on administrative costs.
Reduce future cost-of-living adjustments for current retirees by 0. Gradually increase the retirement age for those born after from 67 to President Bush has made a different proposal, one that has resulted in a great deal of controversy.
Would you reduce benefits across the board, or just for those with the highest-income? General federal tax revenues will pay for roughly three-fourths of SMI costs, with premiums retirees and beneficiaries pay covering almost all the balance.
Or you could balance the system just by increasing taxes, which Republicans would strongly resist. While no agreement is in sight yet in Washington, it seems clear that some combination of various tax increases and benefit reductions will be necessary to close the significant gap between benefit Social Security outlays and revenues.
This change would affect the 5 percent of workers whose earnings exceed the cap, and they would receive somewhat higher benefits when they retire. Improve efficiency in the medical care delivery system, so that it takes less money to care for retirees and beneficiaries.
Workers currently pay 6. It analyzes various potential changes to the system and calculates the portion of the funding gap that each change could close. Social Security is a Ponzi scheme. This fund supports Medicare Parts B and D, which pay for care from physicians, outpatient facilities, home health care, prescription drugs, and other services for the aged and disabled who have voluntarily enrolled in Parts B and D.
What can individuals do to prepare? The year actuarial deficit of the HI Trust fund amounts to 0. This deficit is projected to grow to 1. A little more than one-third of the funding gap could be closed by gradually increasing the full retirement age for those born in and after from 67 to 69 bythen increase the retirement age by one month for each year that follows.
If this tax cap was gradually eliminated between and it would reduce the deficit by 71 percent. Opponents of privatizing Social Security list several reasons why they think it would do more harm than good: Here are five potential Social Security changes, and how much of the budget shortfall they would address: After that, there will be enough tax revenue coming in to pay out about three quarters of promised benefits.
Would you treat older workers differently from younger workers? According to the summary of the annual report"Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing.
Of course, you can analyze many other combinations. The full retirement age at which workers can collect unreduced Social Security benefits is currently scheduled to increase to 67 for everyone born in or later.
And if the tax cap were increased over 5 years to include 90 percent of all earnings currently about 84 percent of earnings are covered it would reduce the financing gap by 30 percent. For instance, you can see how to completely balance the system just by reducing benefits, which Democrats would strongly resist.
Once again, even though the dollar amounts are quite large, the percentages are relatively small. A little more than one-fourth of the gap could be closed by reducing future benefits for the top 40 percent of current wage earners.
Social Security is broke. The raw numbers bring these potential changes into perspective: Why not take a shot at coming up with your own solution? Medical costs represent a tough retirement planning challenge with no easy solutions. However, a few changes to the system could prevent these steep benefit cuts.
A little more than one-third of the gap could be closed by reducing future cost-of-living adjustments for current retirees by 0. To achieve similar results, benefits would have to be cut 13 percent. Increase premiums retirees and beneficiaries pay for Parts B and D.
Yet together they form the twin pillars of financial security for retirees. If an alternative measure of inflation, the chained CPI-W, were used it would decrease the annual cost-of-living adjustment by an average of about 0. Improve the health of retirees and beneficiaries.A solution to the fiscal cliff should include changes to Social Security.
Demands that Social Security should be taken off the table, such as. Feb 18, · The Social Security trust fund is expected to be exhausted in After that, there will be enough tax revenue coming in to pay out about three quarters of promised benefits.
However, a few. In theory, there are two easy answers to any budget problem: increase income (in this case, raise the percentage taken out of workers' paychecks for Social Security) or reduce spending (in this case, cut the amount paid out in Social Security benefits).
In reality, neither of those solutions is. Sep 22, · The common solutions for solving the Social Security shortfall generally fall into two camps: cut benefits or raise revenue. The good news is that we're only asking you to solve it for Medicare funding: Problems and solutions.
Share; Tweet Medicare's funding problems often get overlooked when the Social Security trustees issue their annual report on the funded status of the Founded: Sep 18, 5 Ways to Fix Social Security Workers say they are willing to pay higher taxes to maintain Social Security benefits.Download