If you’re young to middle aged, you might be worried about the stories coming from Washington. You’re not sure if you’ll ever get the chance to retire when you want to. They keep talking about how social security is quickly running out of money. Yet, you keep plugging away, saving as much as you can for when the time comes.
It’s said that social security is set to run out of money by 2034. That’s not really a long time away, especially or most of us who still have another 10-30 years before we retire. When we do, can we expect there to be no money for us? Well, it appears as if government finally has a plan.
There’s currently a bi-partisan plan supported by both parties. It’s called the Social Securities 2100 Act. Many people are excited about this legislation for several reasons. The main reason is, it fixed the problem and ensures there’s still money in social security for all of us when we finally retire.
“Assuming enactment of the proposal, we estimate that the combined Social Security Trust Fund would be fully solvent (able to pay all scheduled benefits in full on a timely basis) throughout the 75-year projection period under the intermediate assumptions of the 2018 Trustees Report,” said the current Social Security Administration head Stephen Goss.
Details of the Plan
You might think that extending the life of Social Security means cutting people’s benefits. But you’d be wrong. The bill wants to keep all the different benefits the program offers, but even offer more to people. That’s right, the bill aims to increase Social Security benefits by about 2%. Consider that a cost-of-living increase as life becomes more expensive.
But, as you might’ve guessed, in order to keep Social Security alive and pay for the benefit increases, it will require upping the tax. It’s actually not a giant leap. The bill would increase the Social Security payroll tax from 6.2% to 7.4% for both the employer and employee. Before getting frustrated over this increase in the tax, consider these facts.
First, the 1.2% increase is spread out over 24 years and it would increase your benefits by 2%. Any given year, that increase would be about .05%, so you won’t really feel any hurt in your paycheck. It’s a very minimal tax that you will barely see that ensures that Social Security is alive and well when it’s time to retire.
Most people would be okay with this law, which is why it’s popular in both the House and the Senate. Thankfully the government can agree on something during this time of gridlock. It benefits all Americans and is a program we will all need in the decades to come.