Archive for the Social Security Category

Though it has arrived with little fanfare, today, August 14th, is a major day for future retirees. On this day, in 1935, President Roosevelt signed the Social Security Act into law. —and so, with the stroke of a pen, was created a guaranteed income stream for virtually all American senior citizens.
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It’s a perennial question. When you reach age 62, you can apply for Social Security benefits, but they’ll be significantly reduced for life. Or, you can wait until you’re old enough for full benefits (a sliding scale between ages 65 and 67, depending on when you were born). Which is best?

The question isn’t easy to answer, since it depends, among other things, on the age of your future demise. If you die at age 64, you’ll get nothing if you wait. But if you last to age 100, you’ll suffer 35 years of reduced benefits for the sake of a few years of payments early on. Where’s the break-even point?

You can spend hours poring over Excel spreadsheets if you want. But according to The Center For Retirement Research at Boston College, there’s a way you can have your cake and eat it too
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Tens of millions of baby boomers are approaching retirement age. Over the course of the few decades, this enormous segment of the population will stop contributing to Social Security, Medicare, and private investment programs. It will instead be drawing upon these institutions to the tune of trillions of dollars. This will result in enormous dislocations for the economy as a whole, shaking its very foundations. Still, some people—like deputy assistant secretary of the Navy Russell Beland—insist on sticking their heads in the sand and pretending that the problem will go away by itself.
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Barack Obama has come up with an intriguing solution to the Social Security funding crisis: Keep the existing payroll tax for those earning less than $102,000 per year, also tax incomes above $250,000, and levy no tax on earnings between $102,000 and $250,000, creating a "donut hole" in the middle.
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