For as long as I can remember, Americans have been concerned that the governmentโs #Social #Security program will run out of money by the time they get to use it because the Baby Boomers will suck the well dry.
But as former Secretary of Labor #Robert #Reich explains,
โ๏ธSocial Security trustees planned for the Boomers
๐but will face a shortfall in the next decade ๐ฅbecause of increased #income #inequality in the US.๐ฅ
The Social Security trustees anticipated the boom in boomer retirements.
This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from age 65 to 67.
That change is helping finance the boomersโ retirement.
โSo what did the trustees fail to anticipate? โ
Answer: โ๏ธthe degree of income #inequality in 21st century America.โ๏ธ
Put simply, a big part of the American working population is earning less than the Social Security trustees (including me) anticipated decades ago
โ and therefore paying less in Social Security payroll tax.
Had the #pay of American workers kept up with what had been the trend decades ago
โ and kept up with their own #increasing #productivity
โ their โญ๏ธSocial Security payroll tax payments would have been enough to keep the program flush.
At the same time, ๐a much larger chunk of the nationโs total income is going to the top than was expected decades ago.
Hereโs the thing: ๐ฅIncome subject to the payroll tax is #capped.
Every dollar of earnings in excess of the cap is not subject to Social Security payroll taxes.
This yearโs cap is $160,200.
https://kottke.org/24/08/the-reason-social-security-currently-has-a-funding-shortfall