Social Security Changes Summarized

Most senior citizens are aware that changes in our Social Security program are being considered.  But do we know what they are?  Probably not.  SCJ did a search on the Internet to find what is being suggested.  AARP provided the best description, including pros and cons of each proposal.  The list is summarized here.

• Raise the full retirement age.  The age for retirement with full benefits currently stands at 66.  Proposals suggest increasing it to 68 or 70 over a number of years.  Seniors can still retire at age 62 with reduced benefits.
• Begin Longevity Indexing. As lifespans increase, Social Security benefits would be automatically modified based on then-current actuarial tables.
• Recalculate the COLA. The cost of living index is based on the consumer price index.  Suggested changes might include using another index or another form of computation.
• Increase or eliminate the Payroll Tax Cap.  The Social Security payroll tax is applied to wage earners.  The tax is currently capped at $110,100.  This means that anything earned over that figure goes untaxed.  Proposals include increasing the ceiling, or eliminating it altogether.  Eliminating this tax is the proposed change SeniorCitizenJournal.com has strongly supported for several years.
• Reduce Benefits for Higher Earners.  Create a calculation that reduces Social Security benefits for higher wage earners who will need fewer Social Security dollars because of their wealth.
• Increase the Payroll Tax Rate.  Increase the payroll tax rate for both earners and employers.
• Tax All Salary Reduction Plans. Create a tax for currently excluded salary reduction plans such as Flexible Spending Accounts for medical needs.Cover All Newly Hired State and Local Government Workers.  Change legislation so that newly hired state and local government employees are required to participate in Social Security instead of local/state programs.  Some of them are currently allowed to participate in other plans.
• Benefit Improvements. Some citizens are not included in Social Security because they do not meet qualifications.  Proposals include such changes as covering caregivers who stay at home to care for dependent and disabled family.
• Increase number of years used to calculate initial benefits. Increase number of years of earnings used to calculate Social Security benefits from the current 35 to 38 or 40.
• Begin means-testing Social Security beneficiaries. Means testing reduces benefits based on the full range of current income.
• Increase Number of Years Used to Calculate Initial Benefits
• Begin Means-Testing Social Security Benefits

Changes in the Social Security program will affect us all.  Seniors need to be aware of the proposed changes, the pros and cons and then must make choices about which candidates running for office in the fall 2012 they will support.  Ignoring the issues and remaining ignorant and unaware of the proposed changes is not the answer.  Seniors need to educate themselves and be prepared to ask questions of political candidates who will be making decisions about our life-line program, Social Security.