Social Security

Don’t get too excited over the legislative proposals to expand Social Security for FUTURE beneficiaries some increased benefits but . . .

Assuring the long-term sustainability of Social Security should be the first priority.

The first screenshot from the Motley Fool shows the current Social Security benefits formula. The AIME is your average indexed monthly earnings. The bend points underlined below change each year.

To illustrate the proposed changes as described below, if applied in 2019 the 90% becomes 95% and the $926 becomes $1,064.9. So, for the first bend point the additional benefit for future beneficiaries is from $830.70 to $1,011.65 or $180.95, not a bad raise, but it will be implemented over five years. Thus 1% a year; hardly keeping up with inflation.

As for the CPI-E that is no guarantee of a higher COLA as it is assumed. It may or may not provide a higher COLA.

As far as improving the financial condition of the Trust goes, that’s questionable. The Committee for a Responsible Federal Budget’s calculator indicates eliminating the taxable wage cap only closes 77% of the current long-term shortfall before any benefit enhancements.

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