![]() He intended for it to be not the sole source of retiree income but a foundation to build upon. Roosevelt in 1935, Social Security was created to mitigate the risks for the rising number of wage earners in an increasingly industrialized economy, as fewer people lived off the land with their extended families into old age. But so far, legislators have done little to address the problem. There are two ways to close the funding gap: raising payroll taxes or trimming benefits, both of which require congressional approval. ![]() Next year, up to $160,200 of earnings will be subject to these taxes. The payroll tax is split between employers and employees, who each paid 6.2 percent of wages, up to a taxable maximum of $147,000, in 2022. At the same time, a declining birthrate has produced fewer workers contributing to payroll taxes - the primary source of Social Security funds. More baby boomers are collecting payments. If no action is taken, all benefits will shrink by 23 percent.ĭemographic shifts have led to that imbalance. When that happens, incoming tax revenue will be enough to cover only 77 percent of all scheduled benefits. The trust fund that pays retiree benefits will be depleted in 2034, at which time its reserves will run down. Though the financial health of Social Security improved slightly in 2021 from the previous year thanks to a rebounding economy - when more people are working, the program collects more taxes on wages - it faces a longer-term shortfall. Padgett said he had assembled furniture and done maintenance work, while she worked on the furniture’s final touches, like spraying on finishes. Both worked at a furniture manufacturer near their home in Galax, Va., for decades. ![]() Sustained price increases are particularly painful for retirees, many of whom rely on Social Security for a significant share of their household income.įor Ted Padgett, 81, and his wife, Barbara, 78, it’s their only source of income. That dynamic worsened this year when Russia invaded Ukraine, pushing up the cost of fuel and food. Disruptions in the supply chain emerged just as consumers, flush with stimulus payments, were demanding more goods, leading to price increases. The coronavirus pandemic created conditions that led to the fastest pace of inflation in decades. The increase - which will help about 52.5 million people 65 and older and 12 million people with disabilities, among others - is based on the Labor Department’s latest report on the Consumer Price Index, released on Thursday, which said prices increased 8.2 percent over the year through September. ![]()
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