If you ever want to get folks riled up on both sides of an issue, mention the proposed idea to fix Social Security through raising taxes.

The potential increase on the maximum taxable wage cap for Social Security stirs the passion of just about anyone who has confronted the enormous task of saving for retirement. Unfortunately, much of the conversation that happens around this topic slants to one side. 

You hear a lot of soundbites that sound good in the media or specific debates that make a certain income class feel protected — and meanwhile, the facts simply don’t get enough airtime. 

Let’s give the facts the attention they deserve. In this article, we’ll dive into the large body of existing research on this topic. Along the way, we’ll correct some historical misinformation so you’ll understand how the history of the Social Security program as a whole fits into today’s proposals to fix the system.When we finish here, you’ll know the true impact of fixing Social Security through raising taxes or changing the payroll taxes really looks like. 

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Within the next few months, you’re going to start hearing a lot about the impact of the coronavirus pandemic on the Social Security system. 

Even though we have been dealing with this pandemic for many, many months now, we still don’t yet know the full measure of economic damage caused by the shutdowns of schools and businesses. We can reasonably assume this devastation will have long-term effects we’ll feel for years into the future.

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The concept of a universal Social Security benefit, where all retirees receive the same flat payment, isn’t a new idea. But this proposal recently resurfaced and gained attention for its potential to be a long-term fix for the solvency of the Social Security program. 

Proponents of this strategy see it as a way to avoid raising taxes and avoid cutting benefits to mid-and lower-income retirees. At the very least, Universal Social Security benefits certainly would be a departure from the current structure of the program. 

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Increasing the full retirement age for Social Security retirement benefits is one of the most common proposals made to help save Social Security. The idea is that by requiring people to be older before they officially hit the full retirement age, there will be less of a burden on the system and therefore keep Social Security solvent for more generations to come. 

Whatever you might think of this proposed change, one thing is for sure: Something needs to be done about Social Security. 

We are now within 15 years of having benefits cut in order to prevent the program’s trust funds from running dry. Most projections suggest that benefits will have to be cut by around 25% if nothing else is done. Most people simply cannot afford to see a benefit reduction like this! 

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If the annual cost of living adjustments to benefits would have been based on the CPI-E, instead of the current CPI-W, the benefit increase in 2022 would be 1.1% lower! 

Recently, the Social Security Administration announced yet another Social Security cost of living adjustment. And once again, the amount of the adjustment left some wondering why it wasn’t higher. 

The announcement ignited the same conversation and questions as it does every time. In the comments of my videos, my Facebook group, and on my website, many people  say things like, “My expenses have increased a lot more than this cost of living adjustment,” or, even more commonly, “There has to be a better way to measure the increases to living expenses than the way it’s being done now!” 

Given that it’s such a common response to the usual Social Security cost of living increases, I want to cover the proposal that may change how these adjustments are calculated. 

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Now that the votes have been counted and we know that Joe Biden will be “President” Biden in January 2021, it’s time to dive into his plans to change Social Security. 

Biden campaigned on a number of agenda items that came up fairly often during his election bid. We can reasonably expect at least some of his proposals will go through the legislative process to become laws during his term in office.

One of the proposals involves plans to change Social Security.

The New Administration’s Plans to Change Social Security 

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If you file for Social Security retirement benefits before your full retirement age, there is a limit on the amount of income you can earn. This limit is almost always based on your annual earnings, but in certain circumstances, it could be your monthly earnings that are counted.   

 The monthly income limit was created because the Social Security Administration recognized that some people who retire mid-year have already earned more than their yearly earnings limit.  The SSA recognized that it wasn’t fair to make those individuals wait until the next year to file for benefits if they are truly retired, so there are some cases in which it’s your monthly earnings that are counted. 

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Trying to plan for your retirement — but can’t understand the complicated rules for calculating Social Security benefits when you have your own benefit and a spousal benefit?

You’re not alone! Most people find this really perplexing…

…and when you add in a spouse that’s affected by the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) to the mix, the rules become even more tangled. 

If you have a scenario where both spouses are subject to these rules, it can really seem like the convoluted rules are setting you up to fail!  In a case like this, it can mean that one spouse could be forced to have their Social Security benefit calculated with the dual penalties from both the WEP and GPO (at the same time!) 

This application of both of these rules is not necessarily a “double penalty,” but rather a separate type of penalty on each of the separate benefits. 

Don’t worry if it all seems hopelessly confusing. I’ll explain all of this below. 

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