The Social Security Reform Act of 2016, which is a bill that was introduced just weeks ago and aims to make retirement age 69 and greatly cut benefits. This bill will negatively impact the elderly and people who rely on government assistance such as veterans and the disabled. Yet instead of raising the income limits on Social Security taxes, the GOP’s solution to "saving" Social Security is to carve it up, cut benefits, and privatize it. That's not a viable solution for the millions of Americans who are coming up short on retirement funding.
Forbes Magazine recently broke down the bill and how it will impact Americans.
— Workers making around $50,000 would see checks shrink by between 11% and 35%.
— The first year for receiving full benefits would climb to 67.
— Nearly every income bracket would see a reduction, save for the very bottom.
— People making around $12,280 in 2016 who have worked for 30 years would see an increase of around 20%.
— But young people making the same amount would be hit hard by the changes. If they had 14 years of work experience by 2016, they would see their benefits cut in half.
— The plan would also eliminate cost of living adjustments (COLA) for retirees earning above $85,000.
That last item on killing the COLA would hurt the most. Keep in mind that Social Security is the only government retirement benefit that adjusts payments based on inflation. If the cost of living goes up, you can keep up with rising prices — somewhat.
There is no COLA for 401(k) or IRA withdrawals. And private, inflation-adjusted annuities are the exception, not the rule.
Moreover, there's a better way of funding Social Security, which will begin to trim payments in 2034 if nothing is done. Simply raise the earnings cap subject to Social Security taxes, which is set artificially low at $118,000.
That means if you make that amount of money — or less — you're paying the same Social Security tax as millionaires and billionaires. If you make more, you can afford to pay more.
As it stands now, the GOP Social Security slashing is going to get a running start in next year's Congress. The mainstream GOP has long supported such a move, in addition to moving along a plan to privatize and raise the eligibility age for Medicare (to 67).