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Posts Tagged ‘Social Security changes’

Pawlenty Proposes Social Security Benefits Cuts

Wednesday, January 26th, 2011

Former Minnesota Governor Tim Pawlenty stated that limiting Social Security payments to wealthier Americans could help the country lower its growing national deficit. Pawlenty, a potential 2010 presidential candidate, told an audience in the state of New Hampshite that annual increases in payments to wealthier Americans might be scaled. Pawlenty also stated that wealthier Americans do not rely on cost-of-living adjustments.

In 2009, the Social Security program paid out $700 in various benefits to more than 53 million Americans. The program faces a $5.3 trillion financial shortfall over the next 75 years as the nation ages and fewer Americans pay in workers taxes.

Current recipients of Social Security benefits have not seen an increase in payments during the last two years. Pawlenty suggested those with adequate income should have their payments curbed while others should receive payment increases.

Pawlenty also believes the nation should consider raising the retirement age.

Tax Cuts: Dealing with Social Security Windfall

Friday, January 14th, 2011

In December, Congress enacted a 2 percent tax-cut extension for contributions to Social Security for workers with annual salaries up to $106,800. Congress is hoping this tax cut will strengthen the economy.

The tax cut has resulted in additional take-home pay for many Americans, though the amount per check is relatively miniscule. Some Americans note they will be either spending or saving the money: either putting it toward their debt or using it for their day-to-day necessities.

Workers do not need to make any changes to their tax forms, as the tax cut is handled by employers. It should also be noted that the tax cut does not affect employer contributions to Social Security.

The IRS notes that these changes should all be in effect by January 31st. However, employers have until March 31st to make any adjustments for overwithholding. The IRS adds that all though these changes are automatic, workers should still examine their federal tax withholdings every year; as changes may be necessary for lifestyle changes such as children, marriage, buying a new home or divorce.

Furthermore, though the Social Security Administration claims that this temporary drop in income will not affect the system, many Americans are doubting that. Some consequences of the tax cut may include a delay in age where benefits can be received or a lower monthly benefit for future beneficiaries.

Thus, financial advisors across the board recommend that Americans begin thinking more seriously about their financial future, as Social Security benefits may not be very dependable.