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Raise Income Gap, Fix Social Security Budget?

Thursday, April 28th, 2011

According to Care 2, the debt ceiling and the budget funding debate continue, with talk about possible cuts to the Social Security program. Both Republicans and Democrats have expressed their wishes to reform Social Security’s entitlement program. Although the fund itself is stable enough to pay out disability benefits to Americans, it needs reform in order to remain solvent. Republicans have called for privatization and cut backs in the program, while Democrats have suggested raising the retirement age to save funds.

Another discussion about Social Security includes adjusting the cap on how much income can be taxed. The President is backing this idea, suggesting that those making millions should pay more in taxes. The nation’s millionaires and billionaires enjoy tax cuts, while the rest continue to pay in based on their net income.

Take for example the nation’s billionaire, Warren Bufffet. The billionaire investor spoke to a crowd of college students in Virginia about Social Security, saying that he stops paying Social Security taxes on a little bit over $100,000 and then the next $50 billion a year is not taxed a dime in Social Security taxes.

Proponents of the Social Security program worry that no change will result in the program running out of funds by 2037. However, that may not mean the end of the program and Social Security disability benefits, but a reduction in the amount an individual would receive. Raising the income cap is an idea supported by many as a way to eliminate the deficit forecast for the Social Security fund.

Social Security Trust and Disability Insurance Funds

Tuesday, April 26th, 2011

According to the Congress FAQ, anyone born in 1929 or later needs to have worked for 10 years to be eligible for benefits through Social Security. In order to qualify, a person must have earned 40 credits. A worker earns one credit for every $1,120 in earnings, or up to a maximum of four credits per year. The Social Security Administration keeps track of credits and sends a yearly statement with an individual’s benefit qualifications and earnings. Additionally, the Social Security Trust Fund receives payroll taxes and splits them into two separate trust funds, one for the Old-Age and Survivors Insurance and one for Disability Insurance funds.

Social Security Disability Insurance is available to all individuals who are unable to work due to total disability, due to injuries or medical reasons. The Administration determines if a disability applicant meets the requirements and definition of disabled. The eligibility process looks if a claimant is unable to work as he or she did before and unable to adjust to other lines of work due to a medical condition. The program is not for short-term disability but for those who may not be able to work anytime in the future.
The Administration also looks at the age of an applicant when he or she becomes disabled. If an individual becomes disabled before age 24, the Administration generally looks for six credits earned. There is a shifting scale for older workers who have become disabled.

A percentage of payroll taxes is deposited in the Disability Insurance trust fund, about one dollar of every seven brought in is stored away for disability insurance.

Will Baby Boomers Affect Social Security?

Monday, April 25th, 2011

According to the Washington Post, a stampede of Baby Boomers will start in 2011, which means they will soon be tapping Social Security fund benefits. The first wave of Baby Boomers begins turning 65 this year. Any individual working and paying Social Security taxes can earn up to four credits per year based on net income. Social Security is more than a retirement program, it also offers Baby Boomers and others disability benefits in case they are left unable to work.

January 2011 officially started the Era of the Golden Boomers, a term coined for the generation that is set to retire. A flood of individuals tapping into the Social Security benefits could deplete the fund, critics argue. President Obama has suggested raising the retirement age. He is not the only one pushing for such a reform, GOP senators have asked the retirement age be pushed to 70.

Senators Lindsey Graham, Rand Paul and Mike Lee promoted a proposal that would gradually raise the retirement age from 67 to 70, and would not affect individuals currently age 65 or older. The Senators say that such a change would put the entitlement program on a long-term path to solvency without raising taxes. Social Security’s solvency issues could affect funds for individuals seeking Social Security Disability Insurance benefits. Medical reasons or work injuries can affect an individual’s working status, resulting in their inability to hold a job. Disabled individuals do have an option, the SSDI program provides monthly payments to those who cannot go out and earn a living due to a life-affecting disability.