11 minute read

Saving Social Security

You’ve heard the news about recent cuts to food stamps, Medicaid, and disease-prevention programs – are cuts to Medicare and Social Security benefits next? If the Trump administration’s 2020 budget proposals are any indication, it’s definitely something to worry about. The 2017 tax cuts created a massive deficit that needs to be filled – and slashing entitlement programs are being considered as a way to reverse the effects of the tax cuts.

Social Security has long been called the “third rail of politics” – you touch it, you die. But despite his campaign promises before the 2016 election “not to touch Social Security,” Donald Trump has hinted that he may indeed do that in his second term as a way to address the ballooning federal budget deficits. So keep that in mind when you vote in this year’s elections.

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The federal budget deficit has ballooned to almost a trillion dollars (that’s nine zeros, folks), nearly double what it was three years ago, and most people just yawn and pull up the covers, pretending it doesn’t have anything to do with them. But it does. America’ssafetynet

Americans have found it harder and harder to save for their retirement years over the past decade. Slow income growth, unpaid caregiving for children or ailing parents, temporary unemployment after the Great Recession and high healthcare costs have made saving for a Eliz abeth Morse Read Sixty-fourmillion Americans relyon SocialSecurity benefits, andthatnumber ill riseto 74 million by 2030

retirement “nest egg” virtually impossible. Maximizing and protecting our future Social Security benefits is critical to preventing retirement insecurity.

Sixty-four million Americans rely on Social Security benefits, and that number will rise to 74 million by 2030. Of those 64 million people, more than a third are kept out of poverty solely because of those monthly payments.

But according to news reports and government studies, the Social Security trust fund is expected to run out of money in 2036. (The situation for Medicare is even worse – its funds are due to evaporate by 2026.) Women especially are at high risk of financial insecurity when they reach retirement age, due to a number of factors such as lost-income years spent raising children or caring for elderly

SouthCoast SocialSecurityOffices

Avoid being put on hold when calling the national number – call your local Social Security office first! Attleboro 1-888-655-6469 Taunton 1-877-505-4546 Providence 1-877-402-0808 Fall River 1-866-964-3967 New Bedford 1-866-964-7413 Newport 1-866-253-5607

parents, low-income wage history, divorce, or widowhood.

The average monthly benefit is just $1,431. But under current law, Social Security will need to slash benefits by 20% in 2035, the equivalent of cutting almost $300 from monthly benefits. Congress needs to act soon to prevent this catastrophe. The alternative is for the US government to either borrow more money (increasing the already terrifyingly high national debt to $42 trillion) or else jack up FICA payroll taxes by more than 25%.

Congress has it within its powers to protect – and expand – the Social Security safety net, if only they would agree to “play well with others.” Don’tblamethe babyboomers

How did this looming disaster happen? It’s not just that the huge baby boomer generation has started retiring, putting increased pressure on the worker-tobeneficiary ratio. A significant demographic change is that we’re just living longer than we did 80 years ago when the Social Security program was initiated. Social Security was intended to be relied on for a few years – not multiple decades – after retirement.

Another complicating factor is income inequality – the 12.4% FICA payroll tax revenue currently earmarked for entitlement programs only affects income up to $137,700, exempting all income/wages above that from taxation. Yet between 1983 and 2016, the income exempted for taxation mushroomed from $300 billion to $1.2 trillion – a massive loss of potential revenue for Social Security.

Not only that, but US birth rates are at an all-time low, and immigration to the US has declined, resulting in fewer workers to pay those payroll taxes. The result is that Social Security will soon be paying out more money than it brings in.

The current payout schedule, including cost-of-living adjustments (COLA) just isn’t sustainable at this rate. According to a Social Security Trustees report, these net-cash outflows will wipe out Social Security’s $2.9 trillion asset reserves by 2035. Ho can esave SocialSecurity?

The partisan polarization in Congress is preventing any meaningful fix, even though both sides have reasonable plans that could shore up the Social Security system – especially if they could

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hammer out a compromise that incorporates elements of both party’s proposed solutions. Democrats want to eliminate the payroll tax cap of $137,700 – more than 90% of American workers wouldn’t see any difference in their paychecks. The benefit of this approach is that it would immediately boost revenues. In addition, broadening the tax base to include capital income would greatly improve Social Security’s finances.

Republicans want to gradually raise the full retirement age, which would reduce long-term outlays. Future retirees would have to wait longer to collect 100% of their benefits, or else accept a permanent reduction in their monthly benefits if they claim before their full retirement age (FRA). Both scenarios would reduce individuals’ lifetime payouts.

Some Democrat presidential candidates wanted to introduce minimum benefits to help low-income recipients get higher monthly payments. Revising how annual cost-of-living adjustments are calculated, to better reflect what seniors’ actual costs-of-living are (especially healthcare expenses), is another Social Security reform under consideration. Maximizing your o n benefits

Most people don’t realize it, but more than half of Americans pay taxes on their Social Security benefits, depending on which state they live in. If your combined annual income is between $25,000 and $34,000, up to half of your Social Security benefits may be taxable, and for incomes over $34,000, up to 85% may be taxable. Massachusetts does not tax Social Security benefits; however,

Letyourvoicebeheard! Voting is not the only way you can influence the future of Social Security – contact your Congressional delegation and urge them to support legislation that will preserve – and expand – America’s safety net!

In Southeastern Massachusetts: Sen. Edward Markey 202-224-2742 Sen. Elizabeth Warren 202-224-4543 Rep. William Keating 202-225-3111 Rep. Joseph Kennedy 202-225-5931

In Rhode Island: Sen. Jack Reed 202-224-4642 Sen. Sheldon Whitehouse 202-224-2921 Rep. David Cicilline 202-225-4911 Rep. Jim Langevin 202-225-2735

Rhode Island is one of the 13 states that do, so choose your retirement dream home with that in mind.

You can maximize your monthly benefits if you postpone claiming your retirement benefits until you turn 70. If your full retirement age (FRA) is 66 (or 67 if you your own work record as early as your 62nd birthday or, if you’re applying for survivor benefits on the record of a deceased spouse, you can file a claim when you’re 60 years old. If you’re disabled or caring for a deceased spouse’s under16 or disabled child, you can claim as early as age 50.

Massachusettsdoesnottax

SocialSecuritybenefits; ho ever, RhodeIslandisoneof the 13 statesthatdo, sochoose yourretirementdream home iththatin mind

were born in 1960 or later), you earn credits equivalent to 8% for each year you wait – in other words, if your FRA is 67, you’ll increase your monthly benefits by 24% if you hold off claiming benefits until you’re 70. And if you’re already claiming monthly benefits, you can suspend them until you’re 70 to earn some of those credits.

You can claim partial Social Security monthly benefits on

If you’re receiving Social Security benefits, you’re still working, and you’re younger than your full retirement age, your earnings will affect your monthly benefit payments. In 2020, the Social Security Administration will deduct $1 from your benefits for every $2 you earn over $18,240. If you were born between 1943 and 1954, your full retirement age (FRA) is 66 in 2020, and you’re able to earn $48,600 before the Social Security Administration will start deducting $1 for every $3 earned over that amount. The good news is that if you’ve reached your FRA, there’s no limit or penalty on your earnings for the entire year.

You can better manage your future finances by going to socialsecurity.gov/myaccount and setting up your own “my Social Security” account. With it, you can check your earnings history, confirm how many credits you need to retire, see estimates of future benefits while you’re still working or manage your monthly benefits once you start receiving them. You can also check the status of a claim or appeal, change your name, request a replacement Social Security card, and get an instant benefit verification letter. In addition, you can set up or change direct deposit, change your address and get a Social Security 1099 form (SSA-1099). No more standing in line at the Social Security office for routine transactions!

Many Social Security services are also available by calling your nearest Social Security office [see sidebar] or the Social Security Administration’s national toll-free number 1-800-772-1213 or TTY 1-800-325-0778 for the hearing-impaired.

So pull your head out from under those covers and pay attention to what’s happening in this year’s elections – your future financial security will depend upon your vote!

ElizabethMorseRead is an award-winning writer, editor and artist who grew up on the South Coast. After 20 years of working in New York City and traveling the world, she came back home with her children and lives in Fairhaven.

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