Income Inequality Drained Social Security, Forcing Benefit Cuts or Tax Hikes

Alan Greenspan's committee supposedly fixed Social Security funding in the 1980s, but the trust fund will run out much earlier than expected.
Chief actuary attributes the shortfall mainly to rising income inequality since the 1980s, especially from 1983-2000.
Higher earners had incomes rise much more than lower earners, so more income escaped the Social Security payroll tax.
This shifted more earnings above the taxable maximum, reducing Social Security's tax revenue.
To balance its books after 2034, Social Security may need to cut benefits by 25% or raise taxes by 33%.

marketwatch.com

Relevant topic timeline:

9/13/2023

2024 Social Security COLA Rises to 3.2%, But Inflation and Medicare Costs Still Eat Away at Benefits

The forecast for next year's Social Security increase has risen to 3.2% from 3% due to a rise in inflation, but the increase is still significantly lower than the 8.7% COLA in 2023, causing concerns for seniors who have struggled to keep pace with inflation and have seen their share of poverty increase.

10/9/2023

Social Security Changes Coming in 2024: Higher Earnings to Qualify, 3.2% COLA, Higher Tax Cap and Benefits

Social Security beneficiaries in 2024 can expect changes that include an increase in the income threshold required to qualify, a cost-of-living adjustment, higher Social Security tax on income, an increase in the maximum Social Security benefit, and higher income limits for early claimers.

10/16/2023

Social Security Benefits See Modest COLA Bump in 2023, Providing Key Economic Boost for Seniors

Social Security recipients will see a 3.2% increase in their benefits next year, resulting in a smaller boost than the past two years due to moderated inflation, according to the Social Security Administration. The increase in benefits is important for the economy, as Social Security payments significantly contribute to consumer spending and overall GDP. However, recipients still struggle to keep up with rising expenses, particularly in healthcare, which tends to rise faster than inflation rates. The impact of the cost-of-living adjustment is essential for maintaining the value of Social Security benefits over time, especially as seniors become more reliant on them.

10/16/2023

2024 Social Security COLA Increase May Push More Seniors into Higher Tax Brackets

Social Security benefits will increase by 3.2% in 2024, potentially pushing some recipients into a higher income tax bracket and triggering benefit cuts, according to The Senior Citizens League.

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Posted 9/27/2023, 10:15:00 AM

Income Inequality Drained Social Security, Forcing Benefit Cuts or Tax Hikes

Alan Greenspan's committee supposedly fixed Social Security funding in the 1980s, but the trust fund will run out much earlier than expected.
Chief actuary attributes the shortfall mainly to rising income inequality since the 1980s, especially from 1983-2000.
Higher earners had incomes rise much more than lower earners, so more income escaped the Social Security payroll tax.
This shifted more earnings above the taxable maximum, reducing Social Security's tax revenue.
To balance its books after 2034, Social Security may need to cut benefits by 25% or raise taxes by 33%.

marketwatch.com

Relevant topic timeline:

9/13/2023

2024 Social Security COLA Rises to 3.2%, But Inflation and Medicare Costs Still Eat Away at Benefits

10/9/2023

Social Security Changes Coming in 2024: Higher Earnings to Qualify, 3.2% COLA, Higher Tax Cap and Benefits

10/16/2023

Social Security Benefits See Modest COLA Bump in 2023, Providing Key Economic Boost for Seniors

10/16/2023

2024 Social Security COLA Increase May Push More Seniors into Higher Tax Brackets

Social Security benefits will increase by 3.2% in 2024, potentially pushing some recipients into a higher income tax bracket and triggering benefit cuts, according to The Senior Citizens League.