Social Security is heading for a funding cliff, with its trust fund reserves potentially becoming insolvent by 2033 — an outcome that would mean beneficiaries would face a 25% shave on their monthly checks.
Meanwhile, some lawmakers are proposing changes that include both getting rid of the tax cap and other changes to address Social Security's funding challenges. Senator Bernie Sanders, an Independent from Vermont, and Senator Elizabeth Warren, a Democrat from Massachusetts, in February Among their plans: Lift the tax cap for people earning $250,000, and add the Social Security tax to investment and business income, which is currently exempt from the tax.
While House Speaker Kevin McCarthy has said Social Security won't be on the chopping block during the ongoing debt ceiling debate, pushing the retirement age higher isn't a new approach. For instance, the full retirement age was 65 until 1983, when changes to the program took into account the fact that Americans were living longer and the retirement age was raised to 66 or 67 .
Americans' longer lifespans are part of the argument that Republican lawmakers make in favor of lifting the Social Security retirement age: the"miracle" of longer life expectancy means that workers can wait to get their benefits, according to Republican Study Committee's Regardless of whether people can actually work until they are 70, raising the retirement age is effectively a benefits cut because today's workers would lose out on between three and four years of benefits.
Still, with a divided Congress, for now it's unlikely that either the Democrats or Republicans could push through their changes to stabilize Social Security.
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