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That ratio is shrinking, and the negative fiscal impact is growing, he said.
Here aresix potential changes that are coming to Social Security soon.
In other words, any earnings over that amount are not taxed forSocial Security.
Theres a lot of chatter about how higher earners should contribute more, he said.
This idea has broad public support and could help ensure that higher earners contribute their fair share.
Raising the Payroll Tax Rate
Right now, the payroll tax rate is set at 12.4%.
If you are self-employed, congratulations, you pay it all.
Raising this percentage would of course bring in more revenue.
An increase could help shore up funds, said Carlson.
But might not be popular since no one likes higher taxes.
So count this low on the list of likely changes.
For instance, for 2025, the COLA increase will be 2.5%.
Reducing or eliminating these would reduce payouts.
But, said Carlson, that would be a hard sell.
If cuts were made, we could see a lot of pushback from the public and advocacy groups.
Taking benefits before that age results in a reduced amount.
Both Carlson and Orestis said that any change here would have to be nuanced.
Its already been pushed back to 67 for those born in 1960 or later, said Carlson.
Increasing it further would mean people have to wait longer to receive full benefits.
That might not sit well with many who are ready to retire but need those benefits sooner.
In 2023, that generated nearly $51 billion for the fund.
In the short term, this plan would offer relief only to high-income seniors.
And worse, it would jeopardize the programs solvency over the long term.
So, like many political promises, this might be one that is conveniently forgotten.
So, if nothing is done, everyones checks will shrink significantly.
Its a scary thought for anyone relying on Social Security for their retirement income.
And for better or worse, that nuclear option will likely force a combination of changes.
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