U.S. Capital

Potential Changes to the Social Security System to Keep an Eye On

Jul 29, 2020

Tampa, FL (Law Firm Newswire) July 29, 2020 – Millions of Americans rely on Social Security as their main source of income. However, over the past few months, the federal government has spent billions of dollars in economic stimulus to help combat the effects of the COVID-19 pandemic. Many share the concern that this massive increase in spending will jeopardize the Social Security system which, by all accounts, was already in danger.

Saving the Social Security System for future generations will be an enormous challenge. Currently, lawmakers’ concern is focused on overcoming the effects of the pandemic, however, once the novel coronavirus is behind us, lawmakers may begin to look to the following changes to Social Security.

Changing the “Full Retirement Age”

The Social Security Administration provides the standard benefit amount to anyone who waits until Full Retirement Age (FRA) to apply for their benefits. Originally, the FRA was set at 65, but it increased to between 66 and 67 back in 1983. Some have proposed increasing the FRA to reduce the total amount of benefits paid over an applicant’s lifetime, potentially extending the life of the program. Of course, doing so would mean individuals will miss out on years of income and, if they apply early, will qualify for reduced benefits.

Recalculating Cost-of-Living Adjustments

Cost-of-living adjustments (COLAs) are incremental increases to the monthly benefit amount intended to keep Social Security benefits in line with inflation. Some propose changing the way COLAs are calculated, using a “chained CPI,” which shows a slower growth in prices because it assumes consumers change their buying behavior if the cost of goods rises. Of course, this would mean a slower average increase in benefits.

Increasing or Eliminating the Payroll Tax Cap

Social Security taxes are only paid on earnings up to a wage base limit. In 2020, that income limit is $137,700. The result would be up to 90 percent of all earnings would be subject to Social Security tax. Some have even suggested subjecting all income to Social Security taxes. However, this may not solve the problem, because the current calculation of benefits depends, in part, on the amount of Social Security taxes paid. Thus, in theory, the more people pay into the system, the higher monthly benefit they would be entitled to.

Increasing the Payroll Tax Rate

Rather than increasing the amount of income subject to Social Security taxes, some suggest increasing the Social Security tax rate. However, to save the Social Security system, the tax hikes would have to be significant. For example, if adjustments were made today, the would need to go up 3.14 percentage points, from 12.4 percent to 15.54 percent.

Limiting Benefits for Higher-Income Individuals

Limiting the availability of Social Security benefits by imposing a means test would reduce the rate of flow out of Social Security. However, doing so could have unintended consequences if the entire Social Security program losses political support as it benefits fewer people.

Altering the Benefits Formula

Under the current system, the Social Security Administration calculates monthly benefits based on average wages in the 35 years the applicant’s earnings were the highest. However, one option to extend the life of the program involves increasing the number of years included in the calculation, up to as many as 38 or 40 years.

This would mean more people would have periods of $0 wages or low earnings factored in, reducing their average wage. This would also disproportionately affect lower-income individuals in physically demanding jobs who cannot continue to perform the same work as they age.

Social Security retirement benefits are just one type of government benefit. Depending on someone’s circumstances, they may be eligible for other types of benefits that can help them increase their monthly income, including veterans benefits and disability benefits. It is important to search out and apply for all available benefits, as the future of Social Security retirement benefits remains uncertain.

Tampa Bay Social Security attorney, David W. Magann explains that applying for Social Security is not always a straightforward task, and sometimes the involvement of an attorney can be necessary. With extensive experience handling Social Security, disability and veterans’ benefits issues, Attorney Magann skillfully advises his clients and assists them in obtaining the benefits they need and deserve. To learn more, contact Attorney Magann at 813-657-9175 or contact him online at http://www.floridasocialsecurity.com/contact/.

David W. Magann, P.A.
Main Office:
156 W. Robertson St.
Brandon, FL 33511
Call: (813) 657-9175

Tampa Office:
4012 Gunn Highway #165
Tampa, Florida 33618

View Larger Map

  • Be Aware of How You Could Lose Your Social Security Benefits
    1.Cessation of Disability: Usually a “cessation of benefits” occurs when you are not seeking regular and continuing treatment for the medical problems in the original determination for the grant of benefits. Also, if you are able to make enough money to pass above a certain threshold earnings amount, then you’ll stop getting disability benefits. For […]
    NEW MENTAL LISTINGS Effective: January 17, 2017 After a revision of the Diagnostic and Statistical Manual (DSM), and thousands of public comments later, the Social Security Administration (SSA) has published significant revisions to its mental impairment listings.  SSA had issued a Notice of Proposed Rule Making in August 2010, proposing what at the time appeared to be […]
  • SSA is Heading For Delays Again After Recent Cutbacks & Years of Improvement
    Service Cuts, Computer Problems Cloud Social Security’s 79th Birthday: The Social Security Administration should have reason to celebrate. After all, August 14, 2014, marked the 79th anniversary of the day when President Franklin Roosevelt signed the Social Security Act, which ushered in the landmark entitlement program. However, the agency’s birthday was a less than cheerful […]
  • SSA is Ramping Up Disability Reviews in 2014
    The Social Security Disability Benefits Reform Act of 1984 (“DBRA 1984”) was passed by a unanimous, bipartisan vote in the House and Senate (99-0) in September 1984. President Reagan signed the law on October 9, 1984, when it became Pub. L. No. 98-460. One of the main provisions required “medical improvement” before benefits could be terminated where […]
  • Never Allow A Non-Attorney to Represent You At Your Social Security Hearing!
    You should NOT have a non-attorney clerk at your hearing?  This seems obvious, but several Florida law firms and any company identifying themselves as “Experts”, some who are advertising on TV, are sending non-attorney clerks to Social Security Hearings simply because its cheaper for them to do so rather than have an actual attorney appear. How in […]