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1983 changes to Social Security hitting retirees now.
With all the talk about what must be done to change Social Security for the future, you might have missed that changes to the program enacted in 1983 are already affecting those retiring now. One of the most effectual changes from back then is the one which raised Social Security’s full retirement age, or FRA, the age at which you get 100% of the benefit you are entitled to. The FRA, which was once 65, is now between 66 and 67 years of age depending upon the year you were born. The result is lower benefits for those who retire early, but also for those who wait until age 70. This article by Sean Williams of The Motley Fool discusses how benefits are already being affected by those changes made over 3 decades ago. Click here to read more.
The $25,000 income level beyond which a retiree’s SS benefits would be taxed had no cost-of-living rider, so that now, 40 years later and 40 years of inflation later, it’s STILL $25,000. Now that we seniors must take our RMDs & add that amount to our SS retirement benefit, this makes almost certain that we will be taxed on 85% of our SS received for the year. The level of income needs to be updated to include a yearly cost-of-living adjustment. Taking inflation into account, that 1983 $25,000 income level threshold needs to be adjusted upwards to at least $125,000 to $150,000 today. We are being ripped off.
Carol:
We are in complete agreement with your concern. In fact, our advocacy subsidiary (AMAC Action) most recently joined in support of Senior Citizens Tax Elimination Act, H.R. 3206, an Act that seeks to help millions of seniors nationwide by excluding tier I railroad retirement benefits and Social Security benefits when calculating annual gross income. Further, in our Social Security Guarantee legislative proposal, which you can view on the AMAC.us website, we also include a proposal to either eliminate the taxation completely or adjust the thresholds to account for inflation realized since they were put into place decades ago.
Thank you for contacting us and for sharing your concerns.
Gerry Hafer
AMAC Foundation
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