Social Security Expansion Act Explained
What They Don't Want You to Know
Here we go again…
Politicians have reintroduced the Social Security Expansion Act. This bill was first introduced back in June of last year. The terms of the bill provide all Social Security recipients an additional $200 a month increasing benefits by $2,400 a year if it wins approval.
This is the headline information mainstream media will run with, but there is much more to this bill than just the extra $200 a month.
Let’s dig deeper to uncover what’s really behind this bill and who it effects.
The State of Social Security
The current state of Social Secuity is a complete catastrophe waiting to happen. Most politicians agree something needs to be done to rescue retirees from future poverty.
Here are the stats straight from the fact sheets of the politicians:
40% of seniors rely on Social Security for the majority of their income.
1 out of 7 seniors relies on Social Security for more than 90% of their income.
Half of Americans ages 55 & older have no retirement savings.
The Average Social Security benefit is $1,688 a month.
These statistics prove America’s retirees are struggling. Depending upon which camp you find yourself in, this bill can be considered either “Brilliant” or a “Disaster”!
How Do Social Security Taxes Currently Work?
The Social Security tax rate is 12.4%. Half of the tax, or 6.2%, is paid by the employer, and the employee is responsible for paying the other half.
There are no deductions for Social Security tax. It is a full 6.2% on all of an individual’s income up to $160,200 for 2023.
For example, if you make $100,000 this year you would pay $6,200 in Social Security taxes. However, if you make $400,000 this year you would pay the maximum of $9,932 on every dollar earned only up to the $160,200 cap.
This is completely separate from federal income taxes, state income taxes, and Medicare taxes.
Breakdown of the Bill
Here are the top 4 things you need to know about the proposed Social Security Expansion Act:
Increase Social Security benefits by $2,400 a year.
This is pretty straight forward. Every person receiving Social Security would receive an additional $200 in each monthly check.
Cost of Living Adjustments (COLA) for seniors has not been able to keep up with inflation and this would be used to close that gap.
Adopt the Consumer Price Index for the Elderly (CPI-E) to determine cost-of-living adjustments for Social Security beneficiaries.
The CPI-W is currently used to annually adjust benefits paid to Social Security beneficiaries and Supplemental Security Income recipients.
There is bilateral agreement that CPI-E is a better way to measure COLA for seniors and studies have shown it would be more in line with inflation.
People making over $250,000 will pay Social Security taxes.
This would not affect anyone making under $250,000 a year.
Social Security is currently taxed up to $160,200. Any money made over that amount is not subject to Social Security taxes.
Over time, this provision would completely eliminate the cap on Social Security taxes.
Any income made over $250,000 would continue to be charged 6.2% for Social Security taxes.
An additional 12.4% Net Investment income (NII) tax.
NII tax would be imposed on individuals earning more than $200,000 and couples earning more than $250,000.
This is in addition to the 3.8% net investment income tax they pay under the Affordable Care Act.
Total net investment income tax would be 16.2%.
The NII tax does not include capital gains tax or dividends tax, which the investor still has to pay.
This will be on top of federal income taxes and state income taxes as well which could amount to as high as 66% in taxes for high income earners depending upon which state they live in.
What if We Do Nothing?
In its current state, Social Security is projected to be insolvent by 2035. That’s only 12 years away!
This is not coming from financial analysts. These numbers are what is being reported by the Social Security Administration (SSA) themselves.
Insolvency in this case does not mean the entire system goes bankrupt. However, the SSA reports they would have to reduce payments to all Social Security recipients to only 75% of the scheduled benefits.
That’s a 25% pay cut for EVERYONE receiving Social Security benefits!
Is the Social Security Expansion Act the Solution?
With the divided congress it is highly unlikely there is enough cooperation between the House and the Senate to pass the bill.
The obvious desired outcome of the bill is to get high income earners to pay more Social Security taxes to prevent insolvency of the largest Ponzi scheme ever created.
The politicians proposing this bill claim it will allow Social Security to remain solvent for 73 more years through the year 2096.
Then it becomes someone else's responsibility to maintain.
Sharing Used to be Caring
Netflix is falling out of love with its members who share their password with friends and family members. Their infamous password sharing system is being phased out as they begin to crack down on accounts who were simply helping spread their love of the streaming service giant.
Why the change of heart? MONEY!
Netflix claims that over 100 million households are sharing their accounts. The streamer said that the growing number is "impacting our ability to invest in great new TV and films."
Doubtful this actually improves the future quality of their content.
The Solution to Social Security!
The real solution to Social Security is to not rely on Social Security!
Your friends and loved ones deserve a plan that can provide them so much income in retirement that Social Security is simply viewed as an annual bonus.
Share this newsletter.
Write Us a Review!
If you’re receiving value from these newsletters, then prove it!
Take a few minutes to write us a review.
We would really appreciate your feedback (hopefully 5 Star support). This is in relation to us personally as well as the information provided to you about MPI. (Please use “The Compounding Couple” when writing the review)
Thank You!
Thanks for reading! Be sure to click the “Subscribe now” button to never miss a newsletter.
I have mixed opinions on social security. I hate paying into the program. Its also a sad state the country is in and how much people rely on it